Abstract
Whatever the meaning and scope of sovereignty of states is in the global world, as far as cooperative law is concerned, legislatures are connected in a close net of supranational and regional governmental instruments, model laws, and rules established by private entities. These rules vary as to their juridical value. They are interrelated by the fact that their respective juridical value contributes to the argument that a public international cooperative law exists. In turn, this public international law shapes them, as well as national laws. The International Labor Organization’s (ILO) “Promotion of Cooperatives Recommendation, 2002” (ILO R. 193) constitutes the nucleus of this public international law. In addition to recommending a wide gamut of promotional policy measures, it calls repeatedly upon legislatures to provide for an adequate cooperative law. It is the first and only instrument of universal applicability on cooperative law adopted by an international governmental organization.
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- 1.
For the purpose of this article, the words “global” and “globalization” stand for the process of abolition of barriers to the movement of the means of production, especially capital and labor (cf. Becerra 2009, p. 145). The words stand less for an empirical fait accompli than for the rapid transformation of the production where, because of new technologies, capital can be de-localized instantly and capital and labor can be drawn from anywhere and “used” everywhere, including in a virtual manner, that is, they stand for a situation where space and time are losing their conditionality for the economy and where, hence, classical legislation becomes insofar ineffective. As for a differentiation in French between “globalisation”, “mondialisation,” and “universalisation,” see Ost (2001), pp. 5ff. (6f.).
- 2.
Supranational and regional governmental instruments:
-
2003 European Union Council Regulation on the Statute for a European Cooperative Society (SCE), 1435/2003 (EU Regulation). As a regulation, it is directly applicable in the Member States of the EU. It creates a new type of cooperative, the SCE, and does not regulate national cooperatives. It affects however national legislation. See Fici (2013a).
-
2009 Estatuto de las Cooperativas (Mercosur/PM/SO/ANT.NORMA 01/2009) [Mercosur Common Cooperative Statute]. Like the EU Regulation, this statute is directly applicable in the Member States of Mercosur, but its application requires transformation into national law. So far, this has been done by Uruguay only. See Cracogna (2013a).
-
2010 Acte uniforme relatif au droit des sociétés coopératives [Uniform act on cooperatives] adopted by OHADA (Organisation pour l’harmonisation en Afrique du droit des affaires [Organization for the Harmonization in Africa of Business Law]). The Act regulates cooperatives based in the Member States of OHADA and is directly applicable there. See Hiez and Tadjudje (2013).
Model laws:
-
2008 Ley marco para las cooperativas de América Latina [Framework law for cooperatives in Latin America]. Emanating from a private entity, the International Cooperative Alliance (ICA) for the Americas, it has no binding force upon legislatures. It may be assumed however that it will play the same convincing role in law making processes as did its first 1988 edition over the years. See Cracogna (2013b).
-
World Council of Credit Unions (WOCCU) model cooperative law on savings and credit cooperatives, available in English and Spanish at: http://www.woccu.org/policyadvocacy/legreg. Its juridical value and effects are comparable to those of the above mentioned Ley marco, except that it applies to a specific sector only.
Rules by private entities:
-
1995 ICA Statement is the most relevant in this context.
-
- 3.
For the purpose of this the term “juridical value” is used to signify several aspects, namely “legal nature”, “binding force”, “legal effects” and “juridical value” without distinguishing them. As for these distinctions, see Virally (1956), pp. 66ff.
- 4.
The Promotion of Cooperatives Recommendation, 2002. ILC 90-PR23-285-En-Doc, 20 June 2002 (ILO R. 193), available at: www.ilo.org/dyn/normlex/en/f?p=NORMLEXPUB:12100:0::NO:12100:P12100_INSTRUMENT_ID:312531:NO.
- 5.
See ILO R. 193, par. 2, 6, 8(2), 9, 10, 18(c) and (d) et passim.
- 6.
Cooperatives (Developing Countries) Recommendation, 1966. “Predecessor” in inverted commas as the ILO R. 127 applied to the governments of developing countries only, whereas ILO R. 193 is of universal applicability.
- 7.
See International Labor Conference, 89th session 2001, Report V(1): Promotion of cooperatives, Geneva: International Labor Office 2000, Chapter II, 3.
- 8.
ILO R. 193 refers in its Preamble to the challenges of globalization. As for the working definition of the term as used in this article, see footnote 1.
- 9.
ILO R. 193 is addressed to the governments, employers, workers, as well as cooperative organizations of all Member States of the ILO, jointly and severally. The chapters of the Recommendation are arranged accordingly.
- 10.
ILO R. 193, par. 4(g) and 14.
- 11.
“Standards” is the term used to comprise the two instruments through which the International Labor Conference (ILC) creates labor law, namely conventions and recommendations, see ILO Constitution, art. 19, 1.
- 12.
See footnote 7.
- 13.
Committee established under art. 7 of the Standing Orders of the International Labor Conference.
- 14.
See the 2010 General Survey concerning employment instruments in light of the 2008 ILO Declaration on Social Justice for a Fair Globalization, Geneva: International Labor Office, Report of the Committee of Experts on the Application of Conventions and Recommendations (art. 19, 22 and 35 of the Constitution), and Report III (part 1 B), International Labor Conference, 99th Session, 2010, par. 437–510, available at: http://www.ilo.org/public/libdoc/ilo/P/09661/09661%282010-99-1B%29223.pdf.
The beginning of the Report refers (par. 437) to the recognition by the ILO of the “role of cooperatives in employment creation and their contribution to the achievement of social justice”. At the end it states “Recommendation No. 193 provides a specific framework for the creation and maintenance of cooperatives that create jobs and contribute to income generation”.
- 15.
Orizet (1969), pp. 25ff. (42).
- 16.
Bronstein takes as an example the consultations with the Cooperative Branch of the International Labor Office during the elaboration of labor standards. See Bronstein (2004), pp. 219ff. (224).
- 17.
The Experts of the Committee on the Application of Conventions and Recommendations confirmed this as for cooperatives, see footnotes 13 and 14. It may be assumed that they implied that this should extend to cooperative law.
- 18.
There are sufficient “indications” to verify this hypothesis. For lawyers, the questions are whether the structure of cooperatives, prescribed by law, is compatible with social justice; whether cooperative law orients cooperatives to work towards this end; and, whether cooperatives can be compelled through legal means to do so where deviations give rise to concerns by legally interested parties? The argumentation is, hence, legal-normative in nature. See Henrÿ (2008), pp. 179ff.
- 19.
- 20.
Because of the cooperative identity principle, those who rule and those who are ruled by cooperatives are in principle the same persons. The division of roles underlying the governance concept with its potential conflicts does not exist in cooperatives, at least not as marked as in other types of enterprises. The question of democratic participation is therefore peculiar in cooperatives. Other structural features of democratic governance in cooperatives are:
-
The division of powers and functions among the various groups within the cooperative and the reciprocal checks by these groups on each other, as well as the fact that the “ruled” have the right to elect their “rulers”;
-
The democratic control of the cooperative enterprise by the members (voting according to the principle of one member/one vote) is required by the definition of cooperatives and by the cooperative principles;
-
The existence of a specific self-control mechanism at all levels (primary, secondary etc.), which ensures autonomy and independence from whatever outside interference;
-
The self-determination and autonomy through the setting of one’s own rules (by-laws/statutes), and self-management;
-
The goal of cooperation instead of concentration, allowing for the maintenance of the autonomy of the partners, and finally;
-
The high human rights functionality of cooperatives. See Partant (1976), Henrÿ (1994), pp. 21ff.; Laville (2001).
Most of these elements will be discussed under sec. 2.4 within the text of this chapter.
-
- 21.
The influence of private actors on legislation implies a further loss of democratic participation for a number of reasons. First, it occurs within the wider policy approach of privatization of public entities. In addition, law making is shifting in multi-faceted and complex processes from parliaments to governments (see von Bogdandy 1999; Idem, von Bogdandy 2004, pp. 317ff. who, like parliaments, increasingly and because of the technological complexities involved in many legislation projects “outsource” the elaboration of laws to private law firms (see Jahn (2010), p. 21). Second, law making shifts from governments to courts (see Israel (2009)) and from national to regional, inter- and transnational levels (see for example “Gemeinwohldemontage”, in: Frankfurter Allgemeine Zeitung 21.9.2010, 7).
- 22.
See also sec. 2.5.
- 23.
Henrÿ (1998), pp. 12ff.
- 24.
- 25.
See for example Kennedy (1987), pp. 18ff. Another “school” prefers to integrate such other sources into one of the categories of Article 38 §1 of the Statute of the International Court of Justice. Indeed, the elements given below concerning behavior of states prior and subsequent to the adoption of ILO R. 193 could be indicative of an emerging set of “general principles of law recognized by civilized nations” in the sense of Article 38 §1. The details of such a common core need to be researched further, using the method/s of comparative legal science. One may however already now note that a growing number of cooperative laws reflect a similar view of the role of government in the development of cooperatives (promoting without interfering, separating promotion from supervision/control), translate the cooperative principles into legal rules, respect the autonomy of cooperatives, respect the rule of equal treatment of cooperatives by taking into account their specificities [as required by ILO R. 193, par. 3, 6, 7, 8(1)(b), and 10(1) and the UN Guidelines aimed at creating a supportive environment for the development of cooperatives, Res.56/114 (UN Guidelines)], par. 3 and A/56/73, par. 4, 6, 11, 15, and 21, reflect the organization of cooperation between persons or members in view of promoting their economic, social and cultural interests through an enterprise, i.e. more and more laws incorporate the essential elements of the universally recognized definition of cooperatives as contained in par. 2 of ILO R. 193, and limit the scope of application of the cooperative law to the form of organizing cooperation without regulating any specific activity, which is in line with ILO R. 193. However, there is also another, and dominant, trend in cooperative legislation, one which approximates the features of cooperatives with those of stock companies, especially as far as capital structure, management and control is concerned (see Henrÿ (2012a), pp. 197ff).
As this classification of ILO R. 193 in one of the categories of art. 38 §1 of the Statute of the International Court of Justice would not alter the argumentation, this point is not pursued further.
- 26.
See Virally (1956).
- 27.
The constituents are the governments, employers and worker organizations of the Member States (see ILO Constitution, art. 3, 1). This is a unique case among the international governmental organizations.
- 28.
See ILO Constitution, art. 4, 1. The responsibilities of the Director-General and the staff of the International Labor Office are also “international”, see art. 9, 4, i.e. they may neither be given, nor accept instructions by/from their home countries or any other institution or person.
- 29.
Similar Virally (1956), pp. 181f.
- 30.
Emphasis by author.
- 31.
Emphasis by author.
- 32.
The arguments are based on Henrÿ (2013).
- 33.
The texts mentioned hereafter make frequent reference to one another, thus reinforcing ILO R. 193. The UN Guidelines and the EU Regulation refer to the ICA Statement; the preparatory report for the EU Regulation refers to ILO R. 193 (see EU Commission Communication to the Council and the European Parliament, the European Economic and Social Committee and the Committee of Regions. Communication 23/2/2004 on the promotion of cooperative societies in Europe, COM/2004/0018 final (EU Commission Communication)). ILO R. 193 integrates the substance of the ICA Statement; the Ley marco refers to the ICA Statement, to the UN Guidelines and to ILO R. 193.
- 34.
See at footnote 7.
- 35.
Especially the International Covenant on Civil and Political Rights, UN Document 999 UNTS 171 (1966) and the International Covenant on Economic, Social and Cultural Rights, UN Document 993 UNTS 3 (1966). See Henrÿ (1994), op. cit.; Henrÿ (2004), pp. 3ff. [translation of this paper entitled “Cooperative values and principles in the cooperative legislations of the EU Member States and in the EU Regulation on the Statute for a European Cooperative Society (SCE)”, presented to the joint ICA/ILO meeting in Budapest, April 1–2, 2004]. See also Ost (2001), p. 33.
- 36.
See footnote 2.
- 37.
See at footnote 2.
- 38.
See Ley marco, Presentation.
- 39.
See the Conclusions and recommendations of the ICA Africa Cooperative Ministerial Conferences. For example, out of the 16 Recommendations which the 9th ICA Africa Cooperative Ministerial Conference adopted in 2009, two (n. 1 and n. 2) relate directly to the subject of “Cooperative Development Policy and Legislation”. Recommendation n. 2 reads: “It is recommended that ILO Recommendation 193 continues to inform the basis for the […] legislation review process in the region”. The same is true for the Ministerial Conferences organized by the ICA Regional Office for Asia and the Pacific (the most recent one on the subject in 2007). In 2011 the Presidents and Ministers of Labor of the Mercosur countries gave recognition to ILO R. 193 as an instrument to promote cooperatives. See the December 2011 Conferencia Intergubernamental “Hacia la internalización de la Recomendación 193 OIT Promoción de las Cooperativas”, Cumbre de Presidentes y Declaración de los Ministros de Trabajo de los Estados partes del Mercosur and Memoria del “Seminario Taller de Instalación Recomendación 193 OIT, Diciembre 2009”, Montevideo, Uruguay. Reunión especializada de Cooperativas del Mercosur el 10 de Diciembre de 2009. See also Münkner (2009a), pp. 349ff. (363f.).
- 40.
Op. cit.
- 41.
Neither the number of answers, nor their contents in detail, were verified when preparing this text. At the time of the preparation of the General Survey the present author was responsible at the ILO for assessing the answers given by ILO MSs.
- 42.
In 2009 the Corte Suprema de Justicia de Argentina [Supreme Court of Argentine] referred to ILO R. 193 in its decision concerning the case Lago Castro, Andrés Manuel c/ Cooperativa Nueva Salvia Limitada y otros. See Corte Suprema de Justicia de Argentina in the case Lago Castro, Andrés Manuel c/ Cooperativa Nueva Salvia Limitada y otros and the comment on the decision by Prof. Dante Cracogna. Both texts, in: La Ley (t.2010–A) 290 ff. In 2011, the European Court of Justice (EJC) based its decision in the joint cases C-78/08 to C-80/08 on the EU Regulation and on the 2004 EU Commission Communication to specify what it sees as the characteristics of cooperatives. As mentioned above, the EU Commission Communication refers to ILO R. 193. See for a discussion of the ECJ decision, Cusa (2013a); Idem, Cusa (2013b). Reportedly, the High Court of Kerala, India as well as the Supreme Court of India (2/9//2011) likewise ruled in 2011 in this sense. This could not however be verified.
- 43.
Examples of standard setting by private bodies that directly affect cooperative legislation are the quasi-standard setting by the International Accounting Standards Board (IASB), the Financial Accounting Standards Board (FASB) and the Basel Committee on Banking Supervision. Another example is the rules of the financial market to which the globalization of production subjects producers (see Herce, Kohler, p. 13). See also discussion in footnote 21.
- 44.
See http://www.ilo.org/public/english/standards/relm/ilc/ilc90/pdf/pr-23vote.pdf. See also above discussion of the democratic legitimacy of ILO as an institution.
- 45.
- 46.
This role of the ICA is recognized also by the Experts of the Committee on the Application of Conventions and Recommendations in their 2010 General Survey…, op. cit., par. 453.
- 47.
A group of cooperative law specialists gave support to the central arguments put forward here when advising Cooperatives Europe, the European regional organization of the ICA, the European Research Institute on Cooperative and Social Enterprises at Trento University (EURICSE), and EKAI, the research institute of Mondragon Corporation and Mondragon University, on their “Study on the implementation of the EU Regulation 1435/2003 on the Statute for a European Cooperative Society (SCE), October 5, 2010”. See footnote 2, especially, pp. 29, 81, 120, 121ff., 160, and 167 and footnote 56 (p. 114f.).
- 48.
This might be the only difference between ILO R. 193 and ratified ILO conventions.
- 49.
Verdross and Simma (1984), §62.
- 50.
See par. 2 (“association”, “jointly owned”); par. 5. and 6(b) (“solidarity); par. 6(a) (“registration”); par. 6(b) (“reserves”); par. 6(d) (“membership”, “members”); par. 7(2), 4(d), 8(1)(i) and 11(2)(c) (“access to credit”, “loans”, “institutional finance”, “investment”); par. 8.(2)(b) (“legal obligations of cooperatives”); par. 10(2), 11(3)–(4), 14, 17(c) and (e) (“cooperative organizations”, “affiliated cooperatives”); par. 12(c) (banking and insurance cooperatives”) and, foremost, par. 9.
It should also be mentioned that a number of legislations prohibit the use of the denomination “cooperative” by any entity that is not registered and recognized by law as such.
- 51.
See also footnote 5.
- 52.
Further guidance can be had from ILO R. 127.
- 53.
See also Cuevas and Fischer (2006), p. 31.
- 54.
By “cooperative law” I understand all those legal acts—laws, administrative acts, court decisions, jurisprudence, cooperative by-laws/statutes or any other source of law—which regulate the structure and/or the operations of cooperatives as enterprises in the economic sense and as institutions in the legal sense.
This description of cooperative law reflects a wide notion, one which comprises not only the cooperative law itself, but also all other legal rules which shape this institution and regulate its operations. The following areas are most likely to have this quality in any legal system: labor law, competition law, taxation, international accounting/prudential standards, bookkeeping rules, and audit and bankruptcy rules. This systemic view is also reflected in Chapter III, A. of ILO R. 127. It is to be complemented by considering implementation rules and praxes, for example prudential mechanisms, audit a well as registration procedures and mechanisms. It also includes law making procedures and mechanisms as well as legal policy issues.
- 55.
See par. 5, 6(c) and (e), 7(2), 8(1)(b), and 16(d).
- 56.
International Labor Conference, 89th session 2001, Report V(1), Introduction.
- 57.
The explanation of this phenomenon might be that the introduction of the enterprise aspect into the definition of cooperatives is rather recent. See also International Labor Conference, 89th session 2001, Report V(1), op. cit.
- 58.
See Henrÿ (2009a). The discussion on social and community enterprises, as well as on social entrepreneurship, is partly a consequence of the preference of the economic objective over the other objectives in many cooperatives.
- 59.
See Henrÿ (2012a).
- 60.
Göler von Ravensburg (2010).
- 61.
The ICA seems to orientate its work on these lines, in addition to its work by sectors.
- 62.
Emphasis by author.
- 63.
The World Council of Credit Unions (WOCCU) suggests therefore having separate laws on savings and credit cooperatives and on cooperative banks (see footnote 2).
- 64.
Rather contractual in the Anglo-Saxon legal tradition, associative in the continental European one and sui generis in the German-Nordic tradition, Central and South America. One of the aims of the Study Group on European Cooperative Law (SGECOL) is to distill from these and other differences the underlying principles. See Fajardo et al. (2012), pp. 609ff.
- 65.
In the legal sense. Paragraph 6(c) does so for a specific case, while Paragraph 7(2), first sentence, contains the general principle.
- 66.
Instead of applying these laws and rules, which are, more often than not, tailored to the requirements of capital-centered enterprises in an undifferentiating manner to cooperatives. As concerns tax law, one needs differentiating between surplus and profit; as concerns competition law, the relationship between cooperatives and their members must be adequately qualified; as concerns accounting standards and bookkeeping rules, cooperative member shares and mergers of cooperatives must be adequately qualified.
- 67.
As for a working definition of “cooperative law” underlying this article, see footnote 54.
- 68.
See par. 2, 6, 7(2), and 10(1) et passim.
- 69.
- 70.
- 71.
Other languages distinguish between the shares of stock companies and cooperative membership shares by using different words. In French for example “actions” and “parts sociales”.
- 72.
“Not-for-profit” to be distinguished from “non-profit”.
- 73.
“Cooperative acts” as opposed to “commercial acts”. See Pastorino (1993). A number of Latin American legislations, as well as the 2008 Ley marco, op. cit., sec. 7, qualify the transactions between members and their cooperative as “acto cooperativo”.
- 74.
Hiez (2013).
- 75.
See Cid (2004), pp. 80ff.
- 76.
See above concerning ILO R. 193, par. 6(d).
- 77.
See Gabcikovo-Nagymaros Project (Hungary/Slovakia), Judgment. I.C.J. Reports 1997, par. 140.
- 78.
A term used mainly in the debate on CSR in the francophone world. See Javillier (2013), pp. 54ff.
- 79.
- 80.
As for societal audit, see Münkner (2009b), pp. 271ff.
- 81.
See above (footnote 25).
- 82.
See footnote 64. Similar activities are planned in Latin America.
- 83.
See Henrÿ (2012a).
- 84.
See International Labor Conference, 89th session 2001, Report V(1), Chapter II, 3.
- 85.
For a good overview of the comparative advantages of cooperatives, see Bernardi (2007), pp. 11ff.
- 86.
Henrÿ (2009c).
- 87.
The term “internormativity” is borrowed from Carbonnier and adapted to the purpose of this article [see Carbonnier (1988), p. 697f.]. By “internormativity” two concomitant, constantly changing phenomena are understood, namely the interconnection of the different categories of “rules” of behavior (in inverted commas, as norms are also to be found outside “rules”) and the processes of juridicisation and de-juridicisation of these rules, i.e., their movement from law to non-legal norms and vice versa. See also Israel (2009) op. cit.
- 88.
- 89.
See footnote 43.
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Henrÿ, H. (2013). Public International Cooperative Law. In: Cracogna, D., Fici, A., Henrÿ, H. (eds) International Handbook of Cooperative Law. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-30129-2_2
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