Legislation on fair lobbying needs to be clarified – EBA

29/ 01/ 2024

At the end of last year, the Verkhovna Rada registered Draft Law No. 10337 On Fair Lobbying, which is one of the requirements for Ukraine on its way to European integration and has already been adopted in the 1st reading. The European Business Association welcomes the desire to legalize the lobbying market in the country by establishing clear rules for working in this area. At the same time, having analyzed the provisions of the document, the EBA experts still have some suggestions. Thus, in general, there is a difference between the concepts of advocacy and lobbying in the world. Accordingly, these entities are subject to different requirements for registration, work, regulation, etc. According to the draft law, advocacy entities are recognized (except for individuals) as non-business companies that are non-profit organizations under the law, and public organizations. At the same time, for a separate category of legal entities that are not non-business entities and are established by the Commercial Code of Ukraine, the law expressly provides for the possibility of representing the interests of members of certain forms of business associations (in particular, concerns and business associations) in relations with the authorities. In other words, the business community, which unites entrepreneurs and represents the interests of the entire business or industry rather than any individual, is engaged in advocacy, and this should be taken into account when finalizing the draft law. However, the rule defining the concept of advocacy is not quite clear, which can cause confusion, as it necessarily implies that the purpose of the relevant activities of advocacy entities is to defend the public interest. Therefore, it is important to clarify what exactly is meant by the public interest and to fill the relevant definition with clearer criteria. At the same time, the draft law stipulates that lobbying is carried out based on lobbying service agreements, while without such an agreement, a lobbying entity may represent its own interests; each person engaged in lobbying needs to be registered and entered into the relevant register, etc. At the same time, the current vagueness of the concepts means that it is not entirely clear where business associations should be classified. If it turns out that business associations will be considered lobbying entities, then, in fact, the mechanism proposed by the draft law will lead to the need to conclude agreements with all participants (members) of organizations (associations), since any of them can become a customer of lobbying services within the meaning of the draft law. In the EBAs opinion, this will create a risk of an unjustified significant burden on such communities. The reason for this is that in some cases, such agreements will not contain a budget for lobbying services since the membership fee allows the respective member of the association to join, as a rule, any activity of such an organization provided for in the statutory documents of such an entity. In this regard, we believe that it would be advisable to make the relevant provisions of the draft law clearer, unambiguously stipulating that business associations are advocacy entities and that they carry out advocacy as part of representing the interests of their members about government/local authorities. In addition, another provision in this draft law concerns individuals. Thus, individuals have the right to protect their interests, in particular, in courts, which can hardly be called lobbying. It is about representing their interests, submitting complaints and proposals, etc. But this does not mean that a citizen automatically becomes a lobbyist in this case (which means registration in the relevant register, etc.). Therefore, this provision also needs to be clarified. Also, the EBA proposes to clarify that the new law does not apply to activities in the field of state regulatory policy, which are aimed at preparing, adopting, monitoring the effectiveness, and reviewing regulatory acts and are established by the relevant legislation, in particular, the Law of Ukraine On the Principles of State Regulatory Policy in the Field of Economic Activity. Without this clarification, any business entity or citizen who submits proposals or comments to a draft regulatory act as part of a public discussion will also automatically be considered a lobbying entity, subject to all the requirements of the new Law. All of the above and other proposals and comments have already been prepared and sent by the EBA to the Chairman of the Verkhovna Rada of Ukraine and the Chairman of the Verkhovna Rada Committee on Legal Policy. Therefore, we sincerely hope that the voice of the community will be heard and the legislation on fair lobbying will be written clearly and by European practices.

The European Business Association welcomes the desire to legalize the lobbying market in the country by establishing clear rules for working in this area. At the same time, having analyzed the provisions of the document, the EBA experts still have some suggestions.

Thus, in general, there is a difference between the concepts of advocacy and lobbying in the world. Accordingly, these entities are subject to different requirements for registration, work, regulation, etc.

According to the draft law, advocacy entities are recognized (except for individuals) as non-business companies that are non-profit organizations under the law, and public organizations. At the same time, for a separate category of legal entities that are not non-business entities and are established by the Commercial Code of Ukraine, the law expressly provides for the possibility of representing the interests of members of certain forms of business associations (in particular, concerns and business associations) in relations with the authorities. In other words, the business community, which unites entrepreneurs and represents the interests of the entire business or industry rather than any individual, is engaged in advocacy, and this should be taken into account when finalizing the draft law. However, the rule defining the concept of advocacy is not quite clear, which can cause confusion, as it necessarily implies that the purpose of the relevant activities of advocacy entities is to defend the public interest. Therefore, it is important to clarify what exactly is meant by the public interest and to fill the relevant definition with clearer criteria.

At the same time, the draft law stipulates that lobbying is carried out based on lobbying service agreements, while without such an agreement, a lobbying entity may represent its own interests; each person engaged in lobbying needs to be registered and entered into the relevant register, etc.

At the same time, the current vagueness of the concepts means that it is not entirely clear where business associations should be classified. If it turns out that business associations will be considered lobbying entities, then, in fact, the mechanism proposed by the draft law will lead to the need to conclude agreements with all participants (members) of organizations (associations), since any of them can become a customer of lobbying services within the meaning of the draft law. In the EBA’s opinion, this will create a risk of an unjustified significant burden on such communities. The reason for this is that in some cases, such agreements will not contain a budget for lobbying services since the membership fee allows the respective member of the association to join, as a rule, any activity of such an organization provided for in the statutory documents of such an entity. In this regard, we believe that it would be advisable to make the relevant provisions of the draft law clearer, unambiguously stipulating that business associations are advocacy entities and that they carry out advocacy as part of representing the interests of their members about government/local authorities.

In addition, another provision in this draft law concerns individuals. Thus, individuals have the right to protect their interests, in particular, in courts, which can hardly be called lobbying. It is about representing their interests, submitting complaints and proposals, etc. But this does not mean that a citizen automatically becomes a lobbyist in this case (which means registration in the relevant register, etc.). Therefore, this provision also needs to be clarified.

Also, the EBA proposes to clarify that the new law does not apply to activities in the field of state regulatory policy, which are aimed at preparing, adopting, monitoring the effectiveness, and reviewing regulatory acts and are established by the relevant legislation, in particular, the Law of Ukraine “On the Principles of State Regulatory Policy in the Field of Economic Activity.” Without this clarification, any business entity or citizen who submits proposals or comments to a draft regulatory act as part of a public discussion will also automatically be considered a lobbying entity, subject to all the requirements of the new Law.

All of the above and other proposals and comments have already been prepared and sent by the EBA to the Chairman of the Verkhovna Rada of Ukraine and the Chairman of the Verkhovna Rada Committee on Legal Policy. Therefore, we sincerely hope that the voice of the community will be heard and the legislation on fair lobbying will be written clearly and by European practices.