This February, the Dutch parliament will discuss the draft Transparency Act. This draft law was first tabled in 2018 and since then, different versions have been tabled by the government. ECNL analysed the previous versions of the draft law, most recently in 2021. The current draft is largely similar to the 2021 version.
What is the law about?
The objective of the law is to empower public authorities with instruments to address activities of civil society organisations (CSOs) that “undermine or threaten to undermine the democratic rule of law or public authority” (Nota van wijziging, document number 35646-7, available in Dutch). “Undermine” is further defined as “engaging in systematic, deliberate, and, in many cases, covert activities which by virtue of the objectives pursued, the means used or their effects, weaken, destabilise, undermine or sabotage the democratic rule of law, its institutions and social cohesion between citizens.” CSOs covered by the law include groups registered as foundations, associations, or religious societies, as well as entities registered abroad as a similar entity and deploying activities in the Netherlands.
The key measures introduced can be summarised as follows:
Information requests by mayors and other authorities (art. 3 and 4)
As part of their responsibility to maintain public order, mayors can request CSOs to provide information on the origin, objective, and size of any donations (financial or in-kind) received. In cases of “substantial” donations, personal data of the donor/s can be requested as well. To this end, the draft law authorises mayors to process information regarding religious and philosophical beliefs that may be derived directly or indirectly from the information requested (Memorie van toelichting, document 35646-3, available in Dutch). Mayors can also share this information with several authorities (e.g. mayors of other municipalities, the police, the Public Prosecutor, and financial authorities). These authorities can also directly request CSOs to provide this information, based on their statutory responsibilities (e.g. countering money laundering, in the case of the Financial Intelligence Unit; carrying out investigations into organisations and individuals who give rise to serious suspicions of endangering the democratic legal order, in the case of the General Intelligence and Security Unit; etc.). If a CSO does not provide the requested information within ten days, the mayor can impose a penalty payment per day of delay. In cases of serious non-compliance – defined as “repeated and deliberate non-compliance", the mayor can also request the court to impose a ban on members of the board for five years. In view of this information obligation, the draft law stipulates that any intermediary located in the Netherlands who donates to a CSO on behalf of a third party must disclose to the CSO the name and place and country of residence of this third party (art. 5). If the third party is a legal entity, the intermediary must also provide the name and place and country of residence of the natural person who represents the legal entity. Implementing regulations can provide further rules on information which must be provided and on anonymous donations (art. 6).
Judicial actions against CSOs that undermine democratic rule of law or public authority (art. 4a)
The Public Prosecutor can request the court to order a CSO to suspend certain activities for two years if it engages in activities that undermine or threaten to undermine the democratic rule of law or public authority. In addition, the court can issue one or more measures, such as a penalty payment, an order to periodically report all or specified categories of donations to the public prosecutor's office and a prohibition to receive certain donations or certain specified categories of donations. In a preliminary ruling, the court can order a CSO to provide information to the Public Prosecutor, if this is necessary for preparing the request to the court or authorise the Prosecutor to seize goods in case of a legitimate fear of misappropriation. A CSO cannot contest such a preliminary ruling, though it can ask the court to lift one or more measures if the ground for them is no longer present.
Transparency and administrative requirements (art. 2, 7 and 8)
The draft law also introduces new administrative requirements for CSOs, namely an obligation to keep information (including personal data) regarding financial and non-financial contributions for seven years. In addition, foundations who are not already required by law to publish their annual accounts, must annually submit a balance sheet and a statement of income and expenses to the Chamber of Commerce. These documents can be consulted by several authorities, namely, the same authorities that are authorised to request information from CSOs (e.g., the Public Prosecutor, the General Intelligence and Security Unit, the police, the Tax Service, and the Financial Intelligence Unit).
The draft law introduces new administrative requirements for CSOs, namely an obligation to keep information (including personal data) regarding financial and non-financial contributions for seven years.
Our concerns
We recognise the importance of addressing activities that undermine democratic freedoms and fundamental rights, as well as the fact that the current draft law includes improvements compared to the first version (as we highlighted in 2021). However, several concerns remain regarding its provisions and their potential implications:
1. Legal uncertainty
First of all, the draft law itself does not provide a sufficiently clear definition of the concept of undermining democratic rule of law or public authority, the draft law vaguely refers to activities which “aim to undermine democratic rule of law or public authority or apparently threaten to do so”. Such activities could potentially trigger judicial actions, but it is unclear what activities could be considered as such. The non-legally-binding explanatory memorandum provides some examples of “undesired behaviour”, namely “isolation or alienation from society, rejection of democratic order as a form of society, vilifying (“verketteren”) of people with differing opinions, and (indirect) incitement to hate and discrimination” (Memorie van toelichting, document 35646-3, available in Dutch). As mentioned above, the non-legally-binding explanatory note to the most recent amendments, in an effort to provide more clarity, gives a definition of undermining and indicates two forms of undermining which are within the scope of the law, namely, “ the deliberately and systematically weakening or undermining of (1) essential organs for the functioning of the rule of law, (2) or (the exercise) of fundamental freedoms” (Nota van wijziging, document number 35646-7, available in Dutch). The note also provides examples of activities that could trigger judicial actions, such as: organising/delivering lectures and speeches for members of an association in which they are incited to abolish democracy; funding events that promote discrimination against certain groups; publishing magazines, newsletters or pamphlets in which certain minority groups are reviled or dismissed; criminal offences, such as drug and arms trafficking. The explanatory note to the most recent amendments states that the measures that can be ordered by court on request of the Public Prosecutor are “exceptional measures for exceptional cases”. According to the memorandum, a single breach of law does not justify the deployment of these instruments, and they should not be deployed against CSOs who speak out against government policy. Yet, there are no safeguards included in the text of the law to ensure a restrictive interpretation and application. Indeed, the Dutch Council of State itself, in its Advice of November 2021 on the draft law tabled at the time, already noted that the examples included in the explanatory memorandum to explain the concept of “undermining” did not provide a uniform interpretation of its scope.
In the same vein, there are no clear criteria on what may constitute an indication of risk or disruption of ‘public order’ that can trigger an information request by mayors and other authorities. The draft Act does not provide clear criteria that will guide the authorities to decide whether or not to demand information on donations and donors. This gives room for discriminatory application, leading to legal uncertainty for CSOs, thus violating the principles of legality and legal certainty. It would not be possible for CSOs to foresee which activities might trigger information requests or even judicial actions. This may lead to self-censorship among CSOs who may, for example, avoid speaking out against government policy on particular issues to avoid scrutiny and potential measures.
Finally, the draft law does not clarify whether the other authorities (e.g., mayors of other municipalities, police, the Public Prosecutor and financial authorities) who can make the same direct requests to CSOs also have the power to impose penalty payments in case of non-compliance or request the court to impose a ban on members of the board of trustees.
2. Far-reaching, discretionary powers of mayors
Mayors are given far-reaching powers to demand information from CSOs about their donations and donors with a large margin of appreciation to assess whether a CSO or its activities is a (potential) threat to ‘public order’. While the objective of the draft law is to address activities that ‘undermine democratic rule or public authority’ - which in the first part implies a threat to national security – the powers of the mayor are related to ‘public order’, which falls under the responsibility of mayors. This is a related, yet different concept. Although it is not defined in Dutch law, it is generally acknowledged that this concept refers to safety and observance of legal norms in public spaces. The mandate of mayors in this respect is based on immediate threats to public order, which require prompt action. As also argued by Karsten and Geuskens in Het Nederlands Juristenblad, it can be questioned whether the objectives of the Transparency Act require such prompt response and whether the information requests can be considered enforcement instruments to allow for quick action. Karsten and Geuskens point out a risk that administrative law is used to obtain information that cannot be obtained through criminal law, but without the same level of safeguards. In addition, the authors question whether mayors have the right expertise to assume this responsibility and argue that this mandate could lead to further politicization of the mayor’s office. Decisions of mayors could be politically influenced. The prosecution of incitement, discrimination and hate speech is the responsibility of the Public Prosecutor. Since the Public Prosecutor is also empowered to request court-ordered measures against CSOs who engage in activities that undermine the rule of law or public authority, we believe this power to make information requests should only be vested in the Public Prosecutor’s office.
3. Potential overbroad impact on CSOs
The legal uncertainty outlined above also means that a large group of CSOs can potentially and arbitrarily be subjected to additional administrative requirements and scrutiny. In 2020, the Council of State concluded that the then proposed measures - i.e., a general transparency requirement for all CSOs who receive funding from outside the EU with a low monetary threshold, the discretionary power of mayors and other authorities to inquire about the name and place of residence of foreign donors as well as the authorisation for mayors to process sensitive personal data– was an interference to the free movement of capital in the EU and added that it was difficult to argue that such interference was necessary and proportionate to the achievement of its declared objective. Although in the new draft the general transparency requirement has become an information obligation upon request, based on activities undertaken by CSOs, given its still vague formulation and the lack of safeguards, too many CSOs could be affected by this measure, compared to what is necessary to achieve the objective of the Act.
Moreover, it is not specified what should be considered “substantial donations”, which could lead to mayors requesting personal data of donors. The explanatory memorandum states that donations can be considered substantial both from an absolute and relative point of view and that authorities could be “inspired” by the 15,000 EUR threshold that is provided by the Dutch Law on anti-money laundering and countering financing of terrorism. However, no clear threshold is provided, which could lead to a broad interpretation.
4. Violation of the rights to privacy and data protection and discrimination of philosophical and religious beliefs
The draft law requests all intermediaries to obtain private information about the donors of CSOs (name, private residency/seat, country) regardless of whether there is a justified reason for further scrutiny by the mayor and other authorities. Implementing regulations will provide more guidance on anonymous donations (other than those through intermediaries). However, the draft law does not provide any safeguards to be included in these implementing regulations to protect the right to privacy of CSOs and their donors. Moreover, the short timeframe during which CSOs must respond to an information request may compel them to obtain and verify information for any donation, to prepare for a potential information request. This may have a chilling effect on donations as legitimate donors might be reluctant to share their personal details (especially in the absence of clarity on how it will be used in future proceedings) and therefore decide not to donate to Dutch CSOs, thereby affecting CSOs’ right to access resources.
Furthermore, if approved, the law enables the mayor to process personal data which may show religious or philosophical beliefs in case of “substantial donations”. Based on the General Data Protection Regulation (GDPR), this is only allowed if “necessary for reasons of substantial public interest, on the basis of Union or Member State law which shall be proportionate to the aim pursued, respect the essence of the right to data protection and provide for suitable and specific measures to safeguard the fundamental rights and the interests of the data subject” (art. 9 (2) (g) GDPR). The Council of State questioned in 2020 whether a substantial public interest was sufficiently argued, as well as the need to allow mayors to share this information with mayors of other municipalities and other public bodies. This need is still not explained sufficiently. Even if argued to be necessary, it is important to demarcate clearly what specific information can be gathered as the current formulation is too broad and no safeguards are provided with respect to the rights of the data subject. This and a potential broad interpretation of the concept of “substantial donations” can lead to disproportionate infringement on the right to privacy and data protection. Furthermore, since the draft law authorises mayors “to process information regarding religious and philosophical beliefs that may be derived directly or indirectly from such information, it can also lead to discriminate against and unnecessarily and disproportionately affect certain religious minority groups, thereby unduly interfering with their freedom of religion and beliefs.
5. Need for additional measures not sufficiently clear
Not only can the need to process personal data be questioned, but this also applies to the other measures proposed. The Council of State concluded in its advice in 2020 that it was insufficiently clear what the added value of the proposed measures would be. Already existing possibilities include the instruments available to the Public Prosecutor, General Intelligence and Security Unit, Tax Service, and Financial Intelligence Unit under their surveillance and investigative responsibilities, as well as legal instruments under civil and administrative law, as set out by the Council of State in an annex to their advice. The Council recommended conducting a thorough analysis of current frameworks in order to assess what additional measures would be appropriate, proportionate and effective. No thorough analysis has been conducted, though, in response to this advice and it is still unclear why these measures are necessary: the legislator only states that the proposed measures are complementary to the existing possibilities, who are “fragmented”. The legislator fails to explain what the implications of such fragmentation are, where any gaps are and how this law would address those.
Mayors are given far-reaching powers to demand information from CSOs about their donations and donors with a large margin of appreciation to assess whether a CSO or its activities is a (potential) threat to ‘public order’.
Conclusion
The Dutch draft Transparency Act aims to address concerns regarding activities that undermine democratic freedoms. However, despite improvements from earlier versions, significant issues remain unaddressed. The broad discretionary powers granted to mayors, the lack of clear criteria and safeguards, the potential chilling effects on the activities of civil society organisations and on donations, and the questions regarding proportionality and necessity pose substantial risks. Moreover, the Council of State expressed concerns regarding the short timeline for advice and consultation in June 2021, which meant that the opportunity for stakeholders, including relevant state advisory bodies, to provide input was severely limited.
These concerns underscore the need for a thorough impact assessment and a more balanced approach. Therefore, we recommend that the Dutch government carefully evaluate the implications of these measures and considers revisions that prioritise clarity, proportionality, and safeguards to ensure that the law strengthens rule of law and democratic freedoms without unintentionally eroding them. More specifically, we recommend the legislator to:
- conduct a thorough analysis of current instruments available to various authorities under their surveillance and investigative responsibilities to identify potential gaps. This would enable the Council of State to assess the necessity and proportionality of the proposed measures;
- provide clear definitions of concepts and scopes (such as an interpretation of the concept of “activities which aim to undermine Dutch rule of law or public authority or apparently threaten to do so”, criteria to identify “substantial donations”, and criteria to assess when processing personal data is necessary to maintain public order) to avoid an overly broad interpretation and application by authorities, and legal uncertainty among CSOs;
- assign the mandate to make information requests to the Public Prosecutor instead of mayors and review the lists of authorities who are authorised to make such requests and with whom information can be shared based on the gap analysis mentioned above; and
- evaluate the necessity of processing sensitive personal data and, if justified, provide more safeguards to protect the privacy of the data subjects (this may include a more precise description of the data to be processed and stricter limitations on its sharing).
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