LHC sets aside ruling that struck down policy for regulating foreign funding of NGOs, NPOs

LAHORE: The Lahore High Court on Monday set aside a ruling that had struck down a federal government policy introduced in 2022 to regulate foreign funding of non-governmental and non-profit organisations.

The policy was set aside by a single bench in September 2024, with Justice Asim Hafeez observing the constitutional scheme did not envisage the exercise of legislative powers by the federal cabinet unless such power or authority was exercised under the authority of the legislature.

He had declared the policy unlawful, invalid and of no legal effect.

But a two-member bench comprising Justice Chaudhry Muhammad Iqbal and Justice Syed Ahsan Raza Kazmi observed today that such policy-making squarely fell within the executive domain and was protected from “undue judicial interference”.

The bench restored the Policy for Local NGOs/NPOs Receiving Foreign Contributions 2022.

Multiple intra-court appeals were filed by the federation in the wake of a Sept 6, 2024 judgment.

Advocate Saqib Jillani, who represented the petitioners, argued that the 2022 policy, like an earlier 2013 framework struck down by courts, lacked statutory backing and violated constitutional protections, including the right to freedom of association and business.

The federal government, represented by Additional Attorney General Mirza Nasar Ahmad, challenged the single-bench ruling, maintaining that the policy had been duly approved by the federal cabinet and issued in accordance with the Rules of Business, 1973.

The division bench framed two central questions: whether the federal government had the authority to formulate policies regulating NGOs receiving foreign contributions, and whether constitutional courts could interfere in such policy decisions under writ jurisdiction.

The bench answered both questions in favour of the government.

The bench held that under Articles 90 and 99 of the Constitution, the federal government was fully empowered to conduct its business and formulate policies.

It maintained that the Rules of Business, 1973 — framed under constitutional authority — provide a binding procedural framework for decision-making.

The bench noted that the 2022 policy was approved by the federal cabinet, and issued by the ministry of economic affairs, which was competent to regulate foreign assistance.

The bench described the policy as a comprehensive regulatory instrument governing the receipt, utilisation, monitoring and accountability of foreign contributions by NGOs.

On the question of judicial review, the bench reiterated settled law that courts should exercise restraint in policy matters unless they violated fundamental rights, the Constitution, the statutory laws or were made in bad faith.

“In the absence of such violations, policy-making remains the exclusive domain of the executive,” the bench observed.

The bench further ruled that the single judge had incorrectly invoked Article 18 (freedom of trade and business), holding that the matter instead fell within the domain of Article 99 of the Constitution, which governs the conduct of federal government business.