The following text on the purpose and status of the legal review of UArctic was shared with UArctic members for the 2018 Council meeting.
Assessment and Review of the University of the Arctic’s Legal Status
Task Force At the meeting in Québec City in December 2017, the members of UArctic’s Board of Governors agreed that for the purpose of contractual capacity, fundraising and liability, an evaluation of our legal basis was warranted. Thus, the Board agreed to create a Task Force to coordinate the evaluation. The members of the Task Force are Board members Frederik Paulsen (Task Force Chair), Jouko Niinimäki and Brian Rogers (Board Chair), and UArctic President Lars Kullerud. The Task Force, through its Chair, is to report on their findings in time for the Board meeting in December 2018 in Hanover, USA where the board may decide to recommend some changes to our legal status to the Council of UArctic. Aim & Limitations The aim of this work is to identify solutions that can help UArctic have a stronger position when it comes to contractual capacity, fundraising and liability. Any solutions finally recommended must ensure that UArctic as a membership organization shall remain as we know it today. This includes maintaining our mission, vision and values, types of membership, governance structure, etc. The tradition of keeping the majority of UArctic operations hosted by our members shall also be maintained. We hope to find a solution that enables UArctic to become a trusted, worthy recipient for donations, and that is, or has, a legal entity with the ability to deal with liabilities that do not alter any important aspect of the network. The aim is that the transition from the present to a future solution can be regarded primarily as a technical matter, but it may require actions by our membership, Council as well as the Board. Expert Support The Task Force has been seeking input from experts from their own organizations and other UArctic members to identify, discuss and clarify outstanding questions. Expert support has been provided by Margaret Wynne (Corporate Secretary & Special Projects) and Arnold Chase (Attorney) from Ferring Pharmaceuticals; Essi Kiuru (Administrative Director, University of Oulu), Markus Aarto (Administrative Director, University of Lapland) and Outi Snellman (Vice-President Organization, UArctic). We have also sought external legal advice from Minister Lauri Tarasti, Finland’s key expert on Association Law, and Liv Monica Stubholt from the law firm Selmer, also former Deputy Minister in Foreign Affairs of Norway with special responsibility for the Arctic.
UArctic International Secretariat, Box 122, University of Lapland, 96101 Rovaniemi, Finland [email protected] | www.uarctic.org
Current Status on the Assessment of UArctic Legal Status The Task Force has developed a draft working document that provides an overview of the following issues: • UArctic Status, including
o History of UArctic to present day o UArctic’s lack of legal status at present o Overview of how UArctic handles responsibilities, reporting, contracting and finances at present • Comparable organizational structures in the Arctic as well as globally • Preliminary analysis of strengths and weaknesses associated with the current structure
Developing a Recommendation The Task Force is currently studying possible structural changes to be considered by UArctic. On a preliminary basis, the recommendation will be to consider some changes to the current framework. The principal alternatives identified thus far include: The “Whole Group” Path To bring the entire UArctic structure under one legal entity, with possible future establishment of additional legal entities in other countries. The country of establishment of this legal entity could be Finland, which is natural in light of the history of the UArctic, or it may be another country (for example Iceland, Denmark or another northern country). The “Hybrid” Path Another alternative being considered is to keep UArctic generally as is and to build a legal entity “in support of” UArctic, bringing certain UArctic functions such as contracting under the legal entity. Several comparable organizations use this approach with varying degrees of success.
Two Independent Feasibility Studies of a UArctic Legal Entity To see if it is possible to create an improved legal status for UArctic, legal experts have been consulted on how UArctic could be organized under Finnish and Norwegian law. The two countries have different legal systems and are representative of Nordic solutions. If deemed necessary, similar studies can be done for other countries as well. The basic assumption shared with the legal experts is that it is important to: • Safeguard UArctic as a membership organization, with roots in the Arctic Council • Preserve our present values, mission and goals • Preserve present membership types (Arctic, non-Arctic) • Keep all main aspects of the present bylaws • Keep most of our ways to operate • Protect or limit members, Board and leadership from liabilities • Make it easy for UArctic to receive and manage funds and donations
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org
In short, the outcome of the two studies is that UArctic could keep most of its present qualities, and at the same time have the benefit of being a “legal person” under both legal systems. Finnish law has a specific Association Act that is a good fit for a membership organization like UArctic. It appears to be quite straightforward to transform UArctic into a membership association under Finnish Law. The transition would take the essence of present bylaws into the bylaws of a new UArctic Association while maintaining the current voting procedures in an operational document. Both documents would be under the control of the Council. Norway (like most Nordic countries) also has associations as legal entities. An alternative would be a Norwegian foundation (a non-profit organization with a specific purpose). Many organizations like UArctic operate as foundations in Norway. There are, however, limitations associated with the Norwegian alternatives which in the end are not as straightforward as the Finnish solution when it comes to ensuring membership’s full control over the organization.
Background The Finnish assessment was prepared by Minister Lauri Tarasti, the key expert on Association Law in Finland and also the author of the textbook on Finnish Association Law for law studies in Finland. A copy of this assessment is provided as Annex 3. The Norwegian case study has been made by Liv Monica Stubholt from the law firm Selmer. Stubholt, beyond being a lawyer, is the former Deputy Minister of Foreign Affairs of Norway with special responsibility for the Arctic, and she knows UArctic very well. This company has also assisted with the legal status of the Arctic Economic Council. A copy of this case study is provided as Annex 2. A draft copy of the comprehensive “Assessment and Review of the University of the Arctic’s legal status” is provided as Annex 1.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org ANNEX 1
This is a living document and shall eventually become an overview report from the UArctic Board of Governors Task Force on UArctic Legal Status to the UArctic Board of Governors. This DRAFT from August 2018 is shared with the Council of UArctic for information to ensure that UArctic members are fully updated on the process. The document is “all encompassing” with references to relevant information included. The text is made to inform external experts and others about UArctic and will therefore include information that is redundant to the Council members.
DRAFT
Assessment and Review of the University of the Arctic’s legal status
Task Force In their meeting in Québec City in December 2017, UArctic’s Board of Governors agreed that for the purpose of contractual capacity, fundraising and liability, an evaluation of UArctic’s legal basis was warranted. Thus, the Board agreed to create a Task Force to coordinate the evaluation. The members of the Task Force are Board members Fredrik Paulsen (Task Force Chair), Jouko Niinimäki and Brian Rogers (Board Chair), and UArctic President Lars Kullerud. The Task Force, through its Chair, is to report on their findings in time for the Board meeting in December 2018 in Hanover, USA.
Aim & limitations The aim of this work is to identify solutions that can help UArctic have a stronger position when it comes to contractual capacity, fundraising and liability. Any solutions finally recommended must ensure that UArctic as a membership organization shall remain as we know it today. This includes maintaining UArctic’s mission, vision and values, types of membership, governance structure, etc. The tradition of keeping the majority of UArctic operations hosted by the members shall also be maintained. The ideal solution would enable UArctic to become a trusted and worthy recipient of donations that is, or has, a legal entity with the ability to deal with liabilities, without altering any important aspect of the present- day UArctic. The aim is that the transition from the present to a future solution can be regarded primarily as a technical matter, but it may require actions from the UArctic membership, Council as well as the Board.
Expert support The Task Force has been seeking input from experts from their own organizations and other UArctic members to identify, discuss, and clarify questions. Expert support has been provided by Margaret Wynne (Corporate Secretary & Special Projects) and Arnold Chase
UArctic International Secretariat, Box 122, University of Lapland, 96101 Rovaniemi, Finland [email protected] | www.uarctic.org DRAFT – August 2018
(Attorney) from Ferring Pharmaceuticals, Essi Kiuru (Administrative Director, University of Oulu), Markus Aarto (Administrative Director, University of Lapland), and Outi Snellman (Vice-President Administration, UArctic). External legal advice has also been sought from Minister Lauri Tarasti, Finland’s key expert on Association Law, and Liv Monica Stubholt from the law firm Selmer, also former Deputy Minister at Foreign Affairs of Norway with special responsibility for the Arctic.
University of the Arctic, background
The University of the Arctic (UArctic) is a cooperative network of universities, colleges, research institutes and other organizations concerned with education and research in and about the North. With sustained annual growth in our membership, today UArctic has over 200 member institutions and organizations, and has become one of the largest education and research networks in the world. The University of the Arctic was initiated in 1998, by the Arctic Council member states (CA, DK, SE, FI, IS, NO, RU, US) with its Ministerial Declaration in Iqaluit (p.3 / #11) announcing that the ministers "Welcome, and are pleased to announce, establishment of a University of the Arctic, a university without walls[…]." This led to the official launch of UArctic in 2001. The organization structure was developed by an international group of experts and approved by the initial slate of members. The UArctic Organization followed the model of other similar Arctic organizations (e.g. IASC). At that point the Arctic Council heritage and the bylaws agreed by the members were regarded as sufficient. UArctic was also not a legal body under any national jurisdiction. The governance system, and consequently the bylaws, were proposed by a circumpolar working group on governance, chaired by Professor Oran Young. Particularly some US members of this working group would have preferred a model that would be based on the custom and law. However, the fact that the central coordinating office would be in Finland at least in the early phase was never fully questioned, as Finland provided funding for the feasibility study and the administrative support to the early development of UArctic. Oran Young’s advice was that UArctic would be allowed to grow as a circumpolar organization only if its governance model would not be based on any one country’s structures or traditions. Hence, when UArctic was launched and the initial governance structures approved, they were different from any other organization that the feasibility study explored. The ministers of the Arctic Council as well as the Standing Committee of Arctic Parliamentarians have regularly issued statements about UArctic in the years following the launch. In 2001, UArctic became an NGO observer to the Arctic Council at the Inari Ministerial meeting, and since then has given regular reports to Arctic governments in this capacity. UArctic is also mentioned in the national Arctic strategies of several Arctic governments. In the “20th Anniversary Declaration - The Arctic Council: A Forum for Peace and Cooperation” (2016), Arctic government ministers reconfirmed their role in creating the University of the Arctic. While all Arctic Council decisions are based on “soft law”, the Arctic governments did sign a binding Arctic Science Cooperation Agreement under the US Arctic Council chairmanship in March 2017 (the “binding agreement”). In this binding agreement the countries state that they; “Recognizing the excellent existing scientific cooperation already under way in many organizations and initiatives, such as ... the University of the Arctic, ... and [the Governments] Desiring to contribute to and build upon existing cooperation and make efforts to develop and expand international Arctic scientific
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
cooperation, in the Arctic.” While no one would question the existence of the Arctic Council, it does not have the status of an intergovernmental body, or any other legal status. Thus, entities created by it, including its own secretariat and working groups, have had to find various ways to solve the challenge of being a “legal person”. The Arctic Council Secretariat has status similar to an embassy located in Norway, some working groups of the Arctic Council are foundations based on national regulations, and others are “projects” hosted by departments of existing government agencies. UArctic has the same kind of challenges. UArctic was initiated by the Arctic Council, itself not a legal entity. Further, UArctic, like the Arctic Council, does not have an international agreement as a legal home similar to a UN body, even if UArctic is explicitly referred to by the governments in a binding agreement.
Present solution to legal status and contractual capacity of UArctic
While the existence of UArctic as an international body has not yet been questioned, as it is backed up by strong governments, this does not make UArctic a “legal person” in any jurisdiction. The mechanisms thus far put in place for governance of UArctic are as follows:
a) UArctic Bylaws and other operational documents are approved by UArctic members through the Council (“general assembly”) and UArctic Board as the appropriate governance mechanisms for the international body UArctic, outside any specific country’s legal system. b) Creation of a small set of legal entities carrying the UArctic name primarily for safeguarding the brand and identity. c) Ensuring that the majority of UArctic operations, responsibilities, funds, staff, etc. are legally part of activities of UArctic member institutions.
The situation of UArctic, and its ways to address these issues, is not unique among Arctic international cooperation initiatives or among international university cooperation initiatives. Thus, several models exist that one could look at in assessing benefits and challenges.
UArctic Bylaws and other documents
UArctic Bylaws and other operational documents and decisions are based on documents approved by UArctic members through the Council (“general assembly”) and UArctic Board as appropriate. This regulates membership, voting rights, appointments of Board and leadership, etc. These documents and the governance system have proven to hold in conflicts on roles in UArctic among members, but were never created for any legal dispute and do not formally create UArctic under any specific legal regime. This way of regulating UArctic’s operations has been respected by members, other organizations, as well as governments as documented by funding decisions and declarations.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
Relevant documents UArctic Bylaws define and set rules for membership and election of governing bodies, including the following:
• The Council of UArctic (Council) consists of representatives of all UArctic member institutions and organizations. • The Board of Governors (Board) consists of up to 15 individuals who are elected by the Council to serve in their personal capacities and act on behalf of UArctic. • Council Executive Committee (Toyon) consists of the Council Officers (i.e. Council Chair, Council Vice-Chair, and Council Secretary) and the Chairs of individual Council Committees. • UArctic Rectors’ Forum is a regular setting for leaders of UArctic’s Higher Education members to meet and discuss issues relevant to their institutions and the Circumpolar North. UArctic Strategic Plan sets the overall strategy for UArctic, and together with the UArctic Strategic Implementation Plan 2017-2020 (work plan) defines the ambitions and targets for UArctic’s operations. UArctic Guidelines for Organization and Management describes the management bodies of UArctic, how they are decided, and how the work is implemented as a distributed organization. UArctic organizational structure (organogram) visualizes UArctic as an organization and relations between the bodies.
UArctic core business and operations
UArctic operations are described in detail and regulated through UArctic Bylaws, Strategic Plan, Strategic Implementation Plan, and UArctic Guidelines for Organization and Management. Below follows a summary of some of this. A fundamental choice for UArctic operations (so far) has been that UArctic is there to strengthen its members and their activities in and for the North, implying that UArctic shall as far as possible avoid building structures competing with its members. Therefore all student-related activities that UArctic develops are carried out by one or more UArctic members. Similarly, research is carried out by experts at UArctic member institutions, even if initiated by UArctic. UArctic shall, however, engage in improving collaboration in these areas in order to promote and increase such northern-relevant activities at member institutions. Thus, UArctic does engage in Arctic science and education policy, funding opportunities and promoting mobility options and opportunities.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
UArctic Thematic Networks and Institutes Academic and research activities of UArctic are predominantly enacted through some 50 UArctic Thematic Networks and UArctic Institutes, each involving experts from only a few to up to 30 member institutions. Each Thematic Network and Institute focuses on an Arctic- relevant issue and can choose whether their way to address this is via shared education efforts, research, or other activities. Thematic Networks and Institutes report on their progress via the UArctic Thematic Networks Coordination and European Research Liaison Office hosted by the University of Oulu (separate MoU agreement). UArctic maintains separate agreements with the designated lead member institution(s) of each Thematic Network and Institute to ensure their commitment to leading these networks. The Council of UArctic approves each Thematic Network, while the Institutes are created via Board decisions. Activities of UArctic Thematic Networks and Institutes are typically funded by in-kind contributions from the partners, the normal operation costs of institutions, and grants and donations raised by the partners. UArctic mobility funding and small grant funding is important for many of the networks.
Education and training One of the overarching goals for UArctic is to promote shared and joint education in, for and about the Arctic delivered through the member institutions. The concrete tools include:
• The UArctic Study Catalogue that promotes northern-relevant education of UArctic members with approximately 1,000 study opportunities. • UArctic course and program endorsement. An exclusive “stamp of quality” given to courses and programs that meet specific criteria of circumpolarity and relevance. • Development and building of shared education offerings by many of the Thematic Networks and Institutes. UArctic engages in finding funding opportunities, supporting coordination and identifying cooperation partners. Examples of the diverse education impacts of the Thematic Networks and Institutes:
o The Circumpolar Studies program (undergraduate) developed and maintained over two decades. It is used online and on campus by approximately ten UArctic institutions at present, and courses taken elsewhere are recognized by many of the members. More than 20,000 students have followed this program. Total investment over years could amount to ten million dollars on teaching and development (only parts of it has been documented). Led and implemented by many UArctic institutions. University of Saskatchewan was the lead from 2003-2012. o Arctic MOOCs open for all on the Coursera platform provide basic understanding about the Arctic. Today two courses are online (approximately 5,000 enrolments so far) and three more are due later this year. Total investment is a few million dollars. Led by UiT The Arctic University of Norway, University of Alberta and Tomsk National University. o Arctic Safety Master program at UNIS. A partnership to develop “world’s best Arctic safety” education and training targeted towards extreme field operations. The present project amounts to two million dollars. Led by University Centre in Svalbard (UNIS). o Arctic Extractive Industries PhD courses gather 10-20 PhD students at different places in the Arctic twice a year for a few weeks of advanced training on the relationship between extractive industries, local governments and local peoples. The courses have been going on for five years. Each event costs under 100,000 dollars, mainly in travel and accommodation costs, and courses have been funded several times from Norwegian UArctic project funding. The lead has rotated but has mainly been University of Lapland and UiT The Arctic University of Norway.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
o The UArctic EALAT Institute has delivered a constant stream of training for Arctic reindeer herding youth in areas such as resilience, adaptation and food production. This has been a series of primarily Bachelor-level short courses and a few Master and PhD level courses, some with and others without credits. This training has been funded from various sources over a series of projects, including the Prince Albert II of Monaco Foundation and Norwegian UArctic funding. Total value of several million dollars. o The UArctic Thematic Network on Northern Nursing Education has developed and delivers specialized training for nurses who operate in small Arctic communities. The network is led from University of Saskatchewan, University of Greenland and UiT The Arctic University of Norway. Some of the work has been funded by SIU (a Norwegian funding agency) matched with Norwegian UArctic funding.
• A new initiative by the Council of UArctic is a request to UArctic to build structures that can support cooperation on vocational training among UArctic members. This is to address the generally acknowledged need for improved and relevant skills training in the North, linked to both traditional livelihoods and new types of jobs that require northern/Arctic adaptation. • There is a clear need for quality education materials on the Arctic. There has been a set of initiatives in UArctic to streamline production and sharing of such tools. Some are available from our website, however, this is an area that still needs development.
Research, outreach and research policy UArctic Thematic Networks and Institutes carry out research and engage in training of next generation of researchers on northern and Arctic issues. The majority of UArctic Thematic Networks and Institutes engage in different forms of northern-relevant research. A typical activity is to produce or contribute to oversight reports on the problems they are engaged in. Some examples include:
• The Finnish chairmanship of the Arctic Council has chosen education as a priority. While preparing for this they contacted UArctic, which led to the creation of the Thematic Network on Teacher Education for Social Justice and Diversity in Education. The Thematic Network unites experts from teacher education institutions from all over the Arctic that work towards long-term increased quality of education in the Arctic. • The Thematic Network on the study of World Images of the Indigenous Peoples of the North organizes workshops and expert seminars that study specific and common features of the world images as seen by the northern people who are united by similar landscape and traditional ways of life. • The UArctic Institute for Arctic Policy has in collaboration with the Wilson Centre (US) organized a series of expert seminars and delivered policy-shaping reports to the Arctic Council and in particular the US government. • The Thematic Network on Geopolitics and Security is the group of researchers who recently nominated the Arctic Council for the Nobel peace prize, a nomination noticed by the Arctic governments. • The Thematic Network on Arctic Law unites all major law schools that train experts on Arctic issues. The group also organizes large meetings, and members of the group publish frequently on matters related to Arctic law. The group also publishes an academic journal on Arctic law.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
• The UArctic Science & Research Analytics Institute utilizes big data in collaboration with Google, Elsevier and other actors to provide facts about who the main actors in Arctic research are. Reports are available on the UArctic website.
UArctic nominates experts from the Thematic Networks to represent the common expertise from UArctic’s membership in working groups of the Arctic Council and similar bodies. The UArctic Research Liaison Offices in Arkhangelsk (covering Russia) and Oulu (covering Europe) ensure that all Thematic Networks in UArctic have access to major funding calls and opportunities, and take initiative to watch collaboration among other networks for joint proposal development. The UArctic Research Infrastructure Catalogue is a newcomer on the UArctic platform, with approximately 250 entries. This Catalogue lists infrastructures that member institutions are ready to share with other UArctic members. The UArctic Chair is a new initiative in which the identity of UArctic is used in collaboration with member institutions to promote and support a research chair that represents excellence in their field. At the moment the UArctic Chair is piloted as a collaboration between University of Oulu, University of Alaska Anchorage and UArctic. The vision is that in the future UArctic could have such chairs with a research as well as an education focus.
Mobility Mobility in UArctic includes long and short-term visits and studies by students at an institution other than their home institution (even distance studies). UArctic normally deals with cross-border mobility. This could range from a full semester at another institution to participation in short courses and field schools. Mobility also includes faculty who give guest lectures at other institutions and/or take part in semester-long visits to do research or education. Exchanges in which two persons swap places (as students or faculty) is a specific case of mobility. Present funding mechanisms for mobility normally have limits to what kind of mobility they can support. The UArctic-branded north2north mobility program includes most of UArctic member institutions and has funding mechanisms for several of the Arctic countries. The demand is far larger than present funding, and it is therefore a UArctic priority to increase support for north2north.
Representing the interest of and promoting our members Representing the interests of its members is another key function of the University of the Arctic:
• Every second year UArctic organizes the UArctic Congress in the country that chairs the Arctic Council. The scientific conference provides an opportunity to promote research carried out in the UArctic network and beyond. • UArctic represents its members in the Arctic Council, IASC and other Arctic-relevant bodies. • UArctic represents its members in international fora, for example the Arctic Science Ministerial meetings. • UArctic is an active partner in major conferences with the main aim of ensuring that our members have good access to such infrastructures. This includes the Arctic Circle
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
(Iceland), Arctic Frontiers (Norway), Arctic Change (Québec), and the Arctic Science Summit Week. • UArctic is in partnership with a series of international organizations to promote and foster our members’ interests. Some examples of the impact of such collaborations include:
o UArctic took an active part in the negotiation of the binding agreement on scientific cooperation in the Arctic. Thanks to UArctic this initiative now also covers e.g. training of young scientists, and also serves the needs of universities, not just state agencies.
o UArctic partnered with the Nordic Council research agency Nordforsk and helped it deliver the first-ever multilateral funding call for Arctic research. The grants it led to are today primarily managed by UArctic member institutions.
o The IASC, IASSA and UArctic collaboration agreement has led to a systematic recognition of the training institutions as major players in Arctic research.
o UArctic is recognized by international organisations like UNEP and UNESCO.
The UArctic website is the main tool for promoting UArctic members. The site has more visitors than the Arctic Council and other Arctic websites, and is as such a good tool to demonstrate the Arctic relevance of an institution. An institution can be promoted through the following means on the website:
• Member profile for each member institution to highlight its Arctic profile and capacities • Study Catalogue gives institutions the possibility to promote their own Arctic education • UArctic endorsement of study programs highlights selected high-quality education opportunities • The Research Infrastructure Catalogue gives an opportunity to showcase capacities and attract partnerships • All member institutions are linked to the Thematic Networks in which they participate • UArctic publishes daily 2-3 news stories about our members, their engagement in Thematic Networks, their student profiles, etc. These articles are linked to the relevant institutions, and therefore promote the institutions towards those who read the news.
UArctic finances UArctic separates between three types of funding: Non-restricted funding: money freely available for the UArctic Board of Governors to decide over. The main source is the membership fee and other annual available funding, altogether in the order of €400,000. Restricted funding: funding made available for specific UArctic activities by a donor, either as an annual contribution or as project funding. Such money serves UArctic needs and
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
purpose, but its use is not directly decided on by UArctic beyond accepting or rejecting the contribution. In some cases UArctic is involved in concrete decision-making over the money within limits set by the funder. Mobility funding, national project funding, and many grants given to specific projects are examples of restricted funding. Annual restricted funding to UArctic is not fully accounted for, but is in the order of several million euros per year. In-kind resources: capacity given to UArctic by our members and others as contributions to our daily work. The portion that contributes to the management of UArctic is regulated through MOUs and is therefore possible to count. Contributions by partners in Thematic Networks, participation in education and research initiatives including field schools, meetings, etc. is difficult to measure. Beyond these, there are resources put into activities that contribute to UArctic’s mission but are not documented anywhere. These are therefore not possible to monitor, except the occasional documentation on the impacts and effects of such investments through student stories, new capacities among member institutions, etc. Since all resources in UArctic are managed through the member institutions, and all member institutions follow national and/or provincial law when it comes to financial statements and audits, UArctic does have a safe system to guarantee against fraud and abuse. UArctic does not have a formal mechanism to control these resources. Membership fees and other direct contributions to UArctic are collected by the UArctic International Secretariat in Finland, while fees from Russian members are collected by the UArctic Research Liaison Office at Northern Arctic Federal University. In both cases money is kept in separate accounts at the institutions, and the use of funds is controlled by UArctic leadership and follows annual budget allocations directed by the UArctic Board of Governors. The accounts are audited as any other project account at the institutions.
UArctic as a legal entity – current status
As described above, the way UArctic is established and how it is defined in the current bylaws does not make UArctic a legal entity. Like many other organizations, UArctic has addressed the issue of recognition, trust and liability through various means that are described below. NGO Status Being a non-governmental organization (NGO) has no legal implications in itself. NGO is a term initially defined by the UN at its creation as a means for public interest organizations to participate in UN systems. The term is now also used beyond the UN, and NGOs are normally non-profit organizations established to serve some public good purpose. UArctic is recognized as an NGO by the Arctic Council. It is UArctic with the present governance system that is observer to the Arctic Council, not any representation of UArctic. UNESCO also welcomed UArctic as an NGO partner in 2017. As the NGO partner of UNESCO needed to be a legal person, it was the University of the Arctic Association ry (see below) that applied for and was granted NGO partner status with UNESCO. UArctic is also perceived and treated as an NGO by most of our partner organizations, governments and funders, and is often invited to address various fora as an NGO.
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[email protected] - www.uarctic.org DRAFT – August 2018
University of the Arctic Association In 2010, at the initiative of the Board of UArctic and with mandate from the Council (general assembly), the University of the Arctic Association ry (Association bylaws) was established as a registered non-profit organization by the Finnish Patent and Registration Office in accordance with the Finnish Associations Act No.503/1989. The purpose of the association is to support the activities of the University of the Arctic network by accepting donations and benefactions through fundraising efforts. In this document the term “UArctic Association ry” is used to refer to this association, while UArctic refers to the international organization UArctic as initiated by the Arctic Council. At the onset it was decided to let the University of the Arctic Association ry be a very passive formal holder of the name, while the UArctic network continues the strategy of having basically all agreements on projects, staffing, etc. formally through the members. The University of the Arctic Association ry has so far no employees, and never has had any economic activity, but it has been used as signatory party to agreements on behalf of UArctic in some cases. Other University of the Arctic entities There is an “Arctic Education and Research” sub-fund to the University of Lapland endowment with the purpose of supporting work in the context of UArctic. The fundraising has been carried out in cooperation with UArctic. In 2012, UArctic established an agreement with a member, Northern Arctic Federal University (NArFU) in Arkhangelsk, to collect and manage funds directed to UArctic from public or private sources within the Russian Federation. This is actively used to manage UArctic membership fees collected in Russia. In addition, the North-Eastern Federal University (NEFU) in Yakutsk established a UArctic Endowment in 2016 for the purpose of receiving donations from within the far-eastern region of Russia. This has not yet been put into any active use. Similarly, in 2016, UArctic entered into agreement with another member, the Institute of the North, an Alaskan registered 501(c)(3) charitable organization. That agreement empowers the Institute of the North to act as a fiscal sponsor for UArctic, and to accept, hold and manage monetary gifts or payments made to or for UArctic that require receipt through a US non- profit. This has not yet been put into any active use. Trademark and copyright In an effort to control and protect the main brand(s), in 2017 UArctic International Secretariat, through its host University of Lapland, registered the brand name “UArctic” and the student mobility program name “north2north” as legal trademarks in Finland with the Finnish Patent and Registration Office (reg. #270482).
Daily operations hosted by members
UArctic’s daily operations are entrusted to a light and distributed administration. The decentralized operations have staff, offices, programs and other functions hosted at member institutions throughout the Circumpolar North. All central leadership and administrative functions are arranged through a set of Memoranda of Understanding (MoUs) between UArctic and the individual host institutions.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
The hosts of these functions are the legal home for staff; for receiving, handling and reporting on funds allocated to UArctic activities; and for implementing activities as agreed with UArctic. The contractual partner for all activities is therefore the member organization hosting the relevant office, not UArctic. These agreements regulate workforce duties, handle funds and conflicts, etc. For the most part other agreements have similar structures and clauses. Academic and research activities of UArctic are predominantly enacted through the 50+ UArctic Thematic Networks and Institutes, which may involve experts from only a few to up to 30 member institutions. The Thematic Networks Coordination and European Research Liaison Office hosted by the University of Oulu coordinates these entities. The Council of UArctic approves each Thematic Network, and UArctic maintains separate agreements with the designated lead member institutions of the networks to ensure their commitment to leading these networks.
External funding
National government funding for UArctic activities typically comes from government agencies that apportion the funds to one or several UArctic member institutions. Such funding typically comes with “strings attached” that define the purpose and priorities. In such cases, UArctic’s leadership is engaged in allocation decisions, and in this way UArctic influences and prioritizes use (within limitations) without being legally responsible for the funds itself. Examples include Norwegian UArctic funding, which is based on a parliament decision made in 2004. It is formally a part of UiT The Arctic University of Norway’s annual budget and managed by UiT in the way described above. Similarly, since 2010 the Danish Agency for Science and Higher Education (previously known as Danish Agency for Science Technology and Innovation) has allocated grants to UArctic to support collaboration on research and education between member institutions from the Kingdom of Denmark and other Arctic countries. In Finland and Sweden there is government funding towards mobility managed by national agencies legally outside UArctic, while the actual funding allocations follow UArctic-set priorities. In the case of Russia and Finland, there is also national strategic funding allocated to universities, which is further allocated to UArctic operations. Thematic Networks, Institutes and UArctic offices also establish agreements separately with external partners to support their activities. For example, the Nordic Council of Ministers, through its Arctic Co-operation Programme, provided project funding to the Thematic Network on Teacher Education for Social Justice and Diversity for its project “Arctic Pedagogy in Teacher Education”. In each of these cases it is the relevant UArctic member that is the formal project partner on behalf of UArctic. Since 2010 UArctic has had a collaboration agreement with the Prince Albert II of Monaco Foundation, which provides project funding for activities of chosen Thematic Networks through a binding application process. The agreement is with UArctic as such, while each project becomes an agreement between the Foundation and the host institution of the project (normally a Thematic Network lead institution). This agreement provides targeted support to UArctic operations as well as political support and visibility. There are also examples of partnership where UArctic has very little influence on the implementation. The partnership with the US foundation Scandinavian Seminar provides
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[email protected] - www.uarctic.org DRAFT – August 2018
scholarships to students from the US to visit UArctic member institutions in the Nordic region. In this case the Scandinavian Seminar takes all decisions on the recipients. The main resources allocated to Thematic Networks, Institutes and UArctic offices come from in-kind contributions by member institutions and project funding, in most cases raised from public sector sources (e.g. research councils). These resources are complicated for UArctic to track, as the legal applicants and contract partners are individual members or consortia of member institutions. UArctic’s focus is therefore on tracking the outputs of the activities (field schools, new courses, research expeditions, research results) and eventually the impacts (skills developed, new knowledge, etc.).
Evaluations and reviews
Over the years, UArctic has conducted a number of internal and external reviews of individual activities to provide advice on actions, as well as reviews of UArctic as a whole. The most extensive review was undertaken when the Board commissioned an external review team to provide an independent review of UArctic, with focus on the progress achieved within the five-year Strategic Plan (2009-2013). The team provided a concise evaluation of UArctic, while offering advice on future direction. The report was published in 2013. Another important review process was an extensive assessment of all existing mobility schemes relevant to the Arctic with the purpose of looking at synergies as well as ways to improve and strengthen the UArctic north2north mobility program (2016). Many projects and funded activities have their own built-in evaluation and impact assessment mechanisms. The Board has also hired consultants to assist with case statements and to give advice on funding from foundations primarily within the US.
How other comparable organizations address legal and contractual issues Examples of Arctic organizations
IASC The International Arctic Science Committee (IASC) is a membership organization of nations normally represented by research councils or academies of sciences interested in promoting Arctic science cooperation. It is a sister organization of the Scientific Committee for Antarctic Research (SCAR) which is a part of the Antarctic Treaty system. IASC has its own membership rules and bylaws, and it collects membership fees, receives grants and distributes funding to researchers, projects and events. IASC has a number of official projects together with the Arctic Council and collaboration agreements with, among others, UArctic. IASC as such is not a legal body, and is not registered in any country, but it was established by a group of countries (like UArctic). IASC operates in the good faith interest in the organization that hosts its Secretariat at a given time. The IASC Secretariat was initially hosted in Norway, then in Sweden and Germany, and it is now hosted by the Research Council of Iceland. The host employs the Secretary-General and manages IASC’s funds based on agreement with the international IASC (an IASC that technically does not exist under any specific national law).
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[email protected] - www.uarctic.org DRAFT – August 2018
IASC is in many ways a parallel to UArctic, both in how it was created and how it has resolved the challenge of legal matters, management of funds and personnel responsibilities. Arctic Council As mentioned, the Arctic Council is formally simply a forum between eight countries. After many years with the Secretariat rotating with the chairmanship, and therefore being part of national government systems (ministries of foreign affairs), the Arctic Council has recently established a permanent Secretariat. The Arctic Council Secretariat is a legal body under Norwegian law, with status similar to an embassy (the foundation document for the Secretariat). The Arctic Council Secretariat can make contracts, establish bank accounts and have employees, and is (in most cases) exempt from taxation. AMAP The Arctic Monitoring and Assessment Program (AMAP) is one of the six working groups of the Arctic Council. AMAP is not a subsidiary of the Arctic Council Secretariat, but rather organized as a working group of the Arctic Council with a board and other structures that direct its work. This organization does not exist as a legal body anywhere. The AMAP Secretariat, on the other hand, is a legal body registered as a foundation (Stiftelse) in Norway with its own board that is established for the sole purpose of supporting AMAP in the Arctic Council. This “Stiftelse” has employees and bank accounts, can sign contracts and can receive and distribute funding. AMAP is thus a hybrid, with a technically “non-existing” AMAP leadership and governing structure with implementation under an independent legal person (registered in Norway) set up to do what the “non-existing” AMAP wishes. There are no formal sanction mechanisms between these bodies, and it is purely a trust-based solution. CAFF & PAME Two of the other working groups of the Arctic Council, the Conservation of Arctic Flora and Fauna (CAFF) and Protection of Arctic Marine Environment (PAME), have main offices located in Iceland. Both are registered as non-profit organizations under the Icelandic law. This legislation allows the board of each to be appointed by the Arctic Council member states as the ultimate decision-making body of the legal entities. This was made possible through a specific decision by the Icelandic parliament. CAFF and PAME have staff, receive funding, engage in contracts, and is ultimately decided on by their boards. The same boards decide on the executive secretary of the organizations. In the case of PAME and CAFF the actual executive structure directly reflects the governance system decided on by the Arctic Council. With this approach most legal challenges are dealt with under national legislation.
Non-Arctic examples The “European Centre of Excellence for Countering Hybrid Threats” The Finnish law seems to be limited in the types of legal persons that exist; associations (membership organizations), foundations and limited companies are the normal options. There is, however, an exception that could serve as a model for the University of the Arctic, namely the “European Centre of Excellence for Countering Hybrid Threats”. This
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[email protected] - www.uarctic.org DRAFT – August 2018
organization is established based on an agreement between a set of governments and has the right to be a legal person in its own right (see section 2.A of this document). The International Association of Universities The International Association of Universities is a membership organization quite similar to UArctic with some 600 members. It is governed by its members who are represented or elect their representatives to three different decision-making bodies. The two main categories of members who hold decision-making power are the institutional members (universities and other higher education institutions) and organizational members (associations of universities). IAU is very similar to UArctic, and the bylaws and the institution’s very existence are not defined under any specific law. IAU has solved this challenge by establishing a main office as a legal body under French law. WWF WWF is a well-known NGO. The main operations of WWF are via national organizations that are themselves independent organizations or legal bodies. WWF is not a membership organization where members elect leadership. WWF leadership is basically replaced by its present leadership via structures such as the board and board of trustees, and members of those bodies are appointed by present leadership at any time. Even if fundamentally non- democratic, WWF has proven to be a very successful mission-driven organization. National WWF organizations contribute to the federal WWF with its main office in Switzerland and need to devote some 80% of resources towards the common mission while 20% can be geared towards national priorities. The Norwegian WWF is a legal person in the form of a “foundation” according to Norwegian law (same as AMAP above). Such a “foundation” can have income, employees, staff, etc. but does not have any owner to take out profit. It will normally pay VAT, but exempts are given for “ideal purpose” foundations like WWF where VAT cost is returned from the tax authorities. WWF Norway receives support by the government of Norway like several other environmental NGOs. WWF Norway board appoints its own successors and governing bodies and is not formally controlled by members, WWF international, or others. Several international NGOs operate in similar ways. Friends of Earth Friends of Earth is an international organization with membership of environmental NGOs from all over the world. The main office is in Netherlands. Its national “friends of earth” are independent organizations that commit to common values and goals and pay a substantial fee to the federal organization. Friends of Earth Norway (Naturvernforbundet) is a membership organization of individuals, which is a legal person as an “Organization” under Norwegian law. This organization receives the same benefits and support from the government as WWF. Friends of Earth Norway is, however, a democratic organization in the sense that those who are members also elect its board and decide on bylaws, etc. UN System / UN University There are two different UN Universities that are sometimes confused with each other:
1. United Nations University UNU, which is the global United Nations University system with headquarters in Tokyo; and 2. University for Peace, former UN University for Peace headquartered in Costa Rica.
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[email protected] - www.uarctic.org DRAFT – August 2018
United Nations University UNU is a global think tank and postgraduate teaching organization headquartered in Japan. The mission of the UN University is to contribute, through collaborative research and education, to efforts to resolve the pressing global problems of human survival, development and welfare that are the concern of the United Nations, its peoples and member states. In carrying out this mission, the UN University works with leading universities and research institutes in UN member states, functioning as a bridge between the international academic community and the United Nations system. The UNU institutes are often supported by the host countries. United Nations University UNU is formally a part of UN and its governing body, the UNU Council has members appointed by UN system and partner countries. A formal cooperation between United Nations University UNU and UArctic was discussed early in the life of UArctic. It was put on hold as it seemed to require UArctic to fully adhere to UNU reporting structures, and thus reduce power of UArctic governance structures (Council and Board). The University for Peace is also a UN treaty body, not further described here.
Generally on trust and agreements
There are fundamental differences in how private sector, international organizations in academia, other international organizations, and governments handle the challenge of mutual trust and compliance to agreements. Government-to-government agreements are only binding as long as parties share the view that it shall be binding. International agreements, international law and international courts are only applicable to the extent that the parties choose to respect them. Countries normally respect such agreements simply because it is to their benefit in the long run; in the next instance, it might be your own country that will benefit from international agreements. International academic collaboration is also fundamentally based on trust, customary regulations and soft law(?), to some extent international agreements, and in some cases the parties agree that national laws apply. International scientific and academic collaboration normally functions well because major institutions such as universities have, like nations, a self-interest in behaving “decently” towards their peers in other countries. Therefore a university will normally oversee that its employees keep to agreements made with peer institutions elsewhere in the world. Conflicts and disagreements occur, but such cases are normally handled by lifting the discussion to the highest level between institutions. If there is an agreed legal framework (law of some country), that of course applies as well. In the private sector it is customary to rely on the legal system of countries and use contracts that include reference to which legal system shall resolve any dispute.
Key questions on the way forward for UArctic
Some key questions have been raised about the present formulation of UArctic, created by eight countries and controlled by a set of member institutions.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
1. Will there be situations where a lack of a “UArctic legal person” might imply that actions by UArctic will transcend to legal responsibilities for its members or its Board, Council leadership and daily leadership as individuals? • This as a possible risk even if unlikely. • There are comparable organizations like IASC that run the same risk and that have, like UArctic, not had this problem for decades. However, the fact that it has not been a problem is not proof that it could not become one. Recommended action: UArctic would benefit from a clear legal home to avoid being challenged under an arbitrary law. Therefore: • UArctic should ensure a legal person is in place that protects Board members, staff and UArctic member organizations. • Future signatory body should be a new UArctic legal body that is fully controlled by UArctic membership through a structure similar to the present UArctic bylaws. • Brand names (trademark, copyright, domain names) should belong to the new UArctic legal body.
2. Is the present UArctic sufficient to be the recipient of donations or to build a fund that can support its operations? • UArctic wishes to engage in fundraising in the name of UArctic and to control how the funds are used through direct intervention. This favours establishment of stronger legal instruments. • A clear home for support to the UArctic mission will simplify communication towards funders. This could be organized either within a renewed UArctic or in a separate “support organization”. In either case, the Board must control the use of resources. • The present model, in which funding flows via member institutions, is accepted by and sometimes preferred by governments and members. • Some funders seem to have challenges with the present model. Recommended action: • UArctic needs to build a structure that can be a trusted handler of funds by restructuring UArctic or by building a UArctic support organization that can take on this role. • UArctic will continue the system of letting members handle funds and donations in relevant cases (government funding, etc.).
3. How do we safeguard the qualities of the present UArctic? • Hosting all UArctic offices at member institutions ensures institutional commitment to UArctic. • All UArctic functions are at the present “subcontracted” to our members. This allows UArctic to focus on its mission, and avoid personnel responsibilities, daily management of personnel and funds, etc.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org DRAFT – August 2018
• Senior staff at member institutions working for UArctic provide institutional knowledge and insight and access to national structures that UArctic would not normally have. • Having students and education hosted by member institutions protects UArctic from challenges of accreditation and quality assurance systems of education (currently taken care of by national systems). • Major research projects hosted at member institutions benefit from institutional structures, and put formal responsibility of the projects on those institutions rather than on UArctic. • A UArctic that does not compete with its members for students and research programs gets institutional support more easily. • By outsourcing all implementation to UArctic members, it becomes more complicated to monitor results and impacts of the work, and UArctic loses the opportunity to earn “overhead” from the activities. Recommended action: Independent of how UArctic is organized, the following strategies should be kept: • UArctic should become and/or build legal entities and organizations that hold and distribute funding fully controlled by UArctic. • UArctic operations should continue to be organized through “subcontracting” our members (staff, funds management, reporting, etc.). • UArctic will normally avoid competing with its members, and shall not have its own students or researchers. • UArctic should, however, seek to build opportunities for funding education, research and mobility using its own identity, and through this provide funding opportunities for members, Thematic Networks and Institutes. • In seeking funding, UArctic will target opportunities that support cross-border collaboration and will normally not compete with local funding opportunities accessible to our members. • UArctic will continue to seek federal and regional government funding that is geared towards supporting member institutions in respective regions.
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[email protected] - www.uarctic.org DRAFT – August 2018
Way forward, main options
There are alternative paths towards a UArctic protected by a legal person, each raising a set of questions and challenges. UArctic will need to choose between the following main directions:
A) “Whole group path” – Establish UArctic as a legal person based on present bylaws and governance structure (make current UArctic a legal person with minor changes) • This approach could be implemented straightforward by UArctic governing bodies. • CAFF and PAME as well as the European Centre of Excellence for Countering Hybrid Threats show that such solutions can be implemented. • There seems to be no downside to this option, if it is possible to implement. 1. Finnish law: a feasibility study has been carried out, concluding that it would be possible to establish UArctic as an association under Finnish Law. Technically a UArctic Association needs to be created, with similar bylaws and rules as UArctic has today, and then assets and members of present-day UArctic will be transferred. 2. Other countries than Finland: a feasibility study has been conducted for the case under Norwegian law. This is assumed to be representative for possible solutions in all the other Nordic countries. The study recommends using the Norwegian Foundation Law. This option is straightforward, but will entail some complications in governance. 3. Canada, Russia and the US have not been studied in detail. 4. Non-Arctic countries like Switzerland and Netherlands seem to be common home countries for similar organizations. This option has not been evaluated as UArctic should primarily seek a legal home in one of the eight Arctic countries. 5. Even with UArctic registered under one country’s legal coverage, ability to have economic activities may be needed in other countries!
o UArctic needs a tax-exempt home in the US as well as Canada. o UArctic needs a legal home in Russia to ensure minimal cross-border economic transactions as well as to ease payment restrictions for our Russian members (in place already).
o How do we ensure that such entities follow instructions/priorities set by UArctic?
o This likely needs different solutions in different countries. These challenges should be resolved after the main question is decided. The main requirement is that the chosen solution allow such entities to exist.
B) “Hybrid path” – move only some activities under a legal entity (with sub-entities in other countries) and keep the overall UArctic outside any specific legal system. UArctic is kept as is as an international body with present structures (or only modest changes). We create one or several legal bodies that “obey” the overall UArctic while they serve as a legal front-end person in all relevant situations. • This approach may continue the present challenges to UArctic governing bodies, but could work.
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[email protected] - www.uarctic.org DRAFT – August 2018
• AMAP and the International Association of Universities are examples of this way to formalize and legalize a body that is not a legal entity in itself. • It is important to ensure that the overall UArctic controls the legal bodies; in practice the elected Board of UArctic should be able to control them. • In this case it is important to consider: • What is the risk of responsibility “transcending” to the governing bodies and persons of the overall UArctic? • Structures that allow UArctic to control the legal entities need to be identified. The Norwegian case study gives an example of this solution. • Which countries would be relevant?
C) Fully revisit UArctic’s legal structure. Based on the assessment above it is evident that improvements are needed, and can be solved by option A or B. The option to totally rewrite UArctic bylaws and governance structure falls outside the scope of this study, but is of course an option should the Council desire to go that way.
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UArctic International Secretariat, Box 122 University of Lapland, 96101 Rovaniemi, Finland
[email protected] - www.uarctic.org ANNEX 2 1
Lauri Tarasti Legal expert in association law
Outline for the possible reform of the formal status of the University of the Arctic under Finnish law
1. The University of the Arctic (UArctic)) is a cooperative network of universities, colleges, research institutes and other organizations concerned with education and research in and about the North. Established in 1998 on the initiative of the Arctic Council and with about 200 members today, it has become a success and one of the largest education and research networks in the world. The UArctic has reached effectiveness and stability. After these 20 years it is now time to consider its formal status in the future.
2. The first question is what kind of legal structure would be the most suitable. There seems to be a wide unanimity that the UArctic needs to have the form of a juridical person. Three alternatives have been presented: as a private limited company, as an association and as a foundation.
The University of the Artic is today a non-profit organization and it should remain as such. It is not a business unit. Therefore, the UArctic should not have the form of a private limited company. A foundation is a juridical person which disposes of a sum of money to be used for the purposes determined in its statutes. A foundation can have no members. Taking into account that the University of Arctic has about 200 members from various countries, the idea to leave them without any direct possibilities to influence on the activities of the University, as it would be in a foundation, is not an optimal solution. Considering the mission and purpose of the UArctic, it is quite clear that an association according to the Finnish Association Act is the best solution for the common organization. It fulfills the requirements of inclusiveness and the overall purpose of the organization. Each member can feel that it is a part of the common UArctic association.
3. The University of the Arctic has today two sets of rules: the UArctic Bylaws and the University of the Arctic Association Bylaws. The first mentioned refers to the cooperative network without being a juridical person. The second set of rules refers to the University of the Arctic Association as a registered legal entity and juridical person in accordance with Finnish law. The two sets of rules have not been unified and the members, and the public face of UArctic has generally referred to, and followed, the UArctic Bylaws. The present members of UArctic are members of the UArctic as defined in the UArctic Bylaws and there is no process in place that formally makes UArctic members also members of the University of the Arctic Association. Conflicts may arise as to which rules should be applied in specific cases. It would also be logic to avoid overlapping rules. 2
It will however be challenging to amend the present University of the Arctic Association Bylaws to fully represent the intention in the UArctic Bylaws in particular when it comes to differentiated membership and voting rights.
For these reasons it would be wise to ensure that there is only one UArctic, that also is a legal person instead of continue to live with the compatibility and coordination of these two rules.
4. To be a juridical person an association must be registered in a country, and given the roots from the Arctic Council, it will be logical to choose one of the Arctic Council member countries. The University of Arctic Association has already been registered in Finland, and the International Secretariat of UArctic is located at the University of Lapland under a long-term agreement.. Thus consequently, the reformed administration of the University of Arctic can also be registered in Finland. Naturally other countries might be possible. Unlike the other Nordic countries Finland has a specific Associations Act which makes the activities in an association stable and easy to understand. Finland has about 100 years´ experiences concerning this Act where democracy is one of its leading principles.
5. This reform will be easier to do if it can be made from the "clean table". This means that the new rules can be written taking completely into account the purposes of this reform. The University of Arctic Association Bylaws and UArcticBylaws would be cancelled, although the main part of these rules would be transferred to the new rules either amended or in their original form.
A new juridical person would be most simple to manage if it has quite short and flexible bylaws while maintaining the fundamental principles of the existing University of the Arctic Bylaws supported by more detailed operational rules (voting procedures etc.) that represent the more lengthy content of the existing UArctic Bylaws. The basic rules necessary in a juridical person should be simple and short. The detailed operational rules should complete and complement the basic rules as regards all relevant activities of the University.
6. It would be useful if the name of the juridical person would be short and easy to use. There are many possibilities in this respect. But one good one would be the already used UArctic. It is well known and easy to understand. The association would thus be the “UArctic Association”. The juridical person must have a domicile and here the present practice would be continued with Rovaniemi as the domicile.
7. It is important that the University of Arctic continues to keep close connections with all Arctic countries Canada, Denmark/Greenland, Finland, Iceland, Sweden, Norway, Russia and the USA. The government of these countries have supported and will support UArctic. The University of the Arctic has today according to the UArctic Bylaws two kinds of members: members from Arctic Council Member countries and Non-Arctic 3
Members. This division should be taken into account also in the rules of the coming juridical person, UArctic Association. The rights and duties of these two groups would be different as they are today in UArticBylaws 2.3 but revised in the juridical person.
8. The representation of the indigenous people must be taken into account in the administration of the UArctic in different connections including at least one representative in the Board.
9. In a juridical person the members have no liability for the function of the person, including debts. The liability of the Council Members and their representatives is limited to the criminal function. According to the Finnish Association Act, a member of the Board and an official of the University shall be liable to compensate all damage they have in office either willfully or negligently caused to the association. However, such case can be raised against them in the court only with the decision of the Board or the Council which has happened utmost seldom. Such liabilities can be covered by insurance as has been done according UArcticBylaws 7.1.2.
10. All donations, testaments, public allowances, membership fees and other normal association activities are in Finland free from all taxes. If the University will undertake business affairs allowed in its rules, it must pay from such incomes normal taxes, such as value added taxes. The taxes from the salaries of an association´s personnel will be collected according to normal practice.
It will be possible to formulate the UArctic Association bylaws so that it can establish activities in other countries as it seems beneficial and the country’s legislation allows it.
11. The freedom of association is guaranteed in the Finnish Constitution. There are presently about 100.000 registered associations in Finland. In connection with the registration to the Patent and Registration Office, the Association is demanded to inform the authorities of the persons who are entitled to act bindingly in the name of the Association. This is public information and available for everybody. However, there is otherwise no special supervision over the associations activities by the Finnish authorities. For example there are no reporting requirements. ANNEX 3
MEMORANDUM
Attorney-at-law in charge: Liv Monica Stubholt
To: University of the Arctic From: Advokatfirmaet Selmer DA Date: 22 August 2018 Subject: Legal status of UArctic – alternative incorporation under Norwegian law Our ref.: 3707586-v2
1 INTRODUCTION
Reference is made to e-mail from the University of the Arctic (hereinafter "UArctic") from Lars Kullerud 2 May 2018, our discussion in the interim and Kullerud's confirmation of the assignment on 20 May 2018.
We understand that UArctic is currently assessing its legal status in terms of identifying the best organisational form and/or incorporation to serve the purpose of UArctic.
UArctic is today an international organisation created on the initiative of the Arctic Council. UArctic has around 200 universities and other organisations as members. The organisation is formally registered in Finland but with no formal incorporation status/legal home for the international organisation UArctic as such. Furthermore, we understand that a key feature of the current bylaws is the different classes of membership within the organisation, where a distinction is made between northern and non-northern members in terms of changing the bylaws, approve new members, elect board members and the leadership of the general assembly.
We have been requested to advise on the main considerations to take into account when considering the legal organisational form for UArctic, and provide a brief presentation of possible alternatives under Norwegian law to demonstrate how these considerations will apply.
Please note that this memorandum presupposes that a new organisation/company will be established, and that we have not assessed any legal, practical or financial implications of a potential transfer of assets, personnel etc. from the existing entity registered in Finland to the possible new entity.
2 SUMMARY
2.1 Preliminary conclusions From a Norwegian perspective, UArctic has three main alternatives with respect to establishing a legal structure in Norway. The three alternatives have naturally different benefits and disadvantages that are further described
Address: P.O.Box 1324 Vika, N-0112 Oslo, Norway • Tel: +47 23 11 65 00 • Fax: +47 23 11 65 01 • www.selmer.no • VAT No.: 947 739 611 in section 4 below. Based on our understanding of UArctic and its purpose, we have below summarised the alternatives in an indicative prioritized order:
(i) Association (no.: Forening) Flexible legal structure Limited liability Possible to set up suitable decision making model No material costs
(ii) Private limited company (no.: Aksjeselskap) Possible to set up suitable decision making model Limited liability Capital requirements and formal capital structure Less flexible structure
(iii) Foundation (no.: Stiftelse) Not a favourable decision making structure Founding capital required Not a flexible structure More administrative burdensome due to the supervision by the Foundation Authority
2.2 Issues to be considered before adopting a decision Before UArctic adopts a decision, however, you may want to consider a part II to this memo which we suggest should be developed in collaboration with you. Part II would include the following elements:
1. A concrete consideration of the implications for UArctic of establishing a Norwegian entity, including the objective of good governance and any limitations to continuing the current efficient, flexible and adaptable response to any new developments 2. A draft structure for how a future UArctic entity over the years may ensure recruitment, retention and replacement of board members and other key individuals in the governing of the activities 3. An assessment of any implications of establishing a UArctic entity for existing and future sources of funding, e.g. Norwegian Research Council and the government
3 MAIN CONSIDERATIONS WHEN CHOOSING A LEGAL STRUCTURE
There are several factors that should be taken into account when assessing which legal structure that will be most suitable for an organisation such as UArctic. We have below highlighted five main factors we deem important for UArctic.
Decision making model: To what extent will the legal structure allow a decision making model that is fit for the purpose of the organisation, e.g. different class of shares/membership. It is also important to consider whether the legal structure provides a level of control over the organisation for the owners and/or members ("Stakeholders") that correspond with their intentions.
Advokatfirmaet Selmer DA 2/6
Independence and limitation of liability: To what extent the legal structure allow for independence of the new entity and that the Stakeholders cannot be held personally liable for the debts and losses incurred by the new entity.
Flexibility: An important factor to consider is the level of flexibility that the selected legal structure offers. This includes inter alia the procedure for amending the bylaws, having new members, distribution of funds, changing the governance structure etc. The assessment of flexibility must also take into account the future needs of the organisation.
Costs and complexity of formation: The formal procedures for establishing the legal structures and the costs of such formation varies, e.g. founding capital requirements. The implications of this factor should be considered in light of the scope of the organisation
Supervision and administration: To what extent the legal structure is subject to supervision by national authorities varies, and different administrative requirements apply, e.g. reporting obligations for amendments of the articles of association, finances etc.
4 ALTERNATIVES UNDER NORWEGIAN LAW
4.1 Private limited company (no.: aksjeselskap)
4.1.1 Brief overview A private limited company ("company") is a separate legal person owned by the shareholder(s). A main characteristic is that the shareholders are not liable to the creditors for the obligations of the company, and that the shareholders is entitled to their share of the profits (dividend) from the company.
The framework for companies are the Norwegian Private Limited liabilities Companies Act ("Company Act") and the articles of association for each company, and agreements between the shareholders if entered into.
Pursuant to the Company Act, all companies must have a share capital of at least NOK 30 000.
The general meetings are a company's supreme authority. The company's shareholders have the right to attend and vote at the general meetings which must be held every year. The company shall also have a board comprising of one or more members. The articles of association may provide that there shall be different kinds of shares (share classes), and that such classes shall have different rights in the company.
As a main rule, the shares of a company may be transferred subject to approval from the company. The other shareholders will have a pre-emption right unless otherwise provided for in the articles of association.
4.1.2 Preliminary assessment The benefit with respect to selecting a company structure for UArctic is that this entail the opportunity to establish different share classes and thus maintain the distinction between northern and non-northern members
Advokatfirmaet Selmer DA 3/6 in terms of voting rights etc. In addition, the company structure offer a limited personal liability and the legal framework is well established and predictable.
On the other hand, there are share capital requirements for establishing a company. The Stakeholders must acquire shares in the company, and this entails that the process of including new Stakeholders or excluding existing Shareholders are somewhat complex as such processes require share capital increase/decreases or transfer of shares. This may both be time consuming and expensive as legal assistance may be necessary.
Our preliminary assessment is that a private limited company may work for UArctic, but that it is not a good alternative given the capital structure of the entity, including the formalities relating to potential change of members and that the main purpose of UArctic is not to carry out business activities.
4.2 Association (no.: forening)
4.2.1 Brief overview An association is a non-profit organisation with members who wish to front causes of idealistic, political or other character. An association must have at least two founders (can be both natural and legal persons) but the association will have no owners (self-owned). A fundamental distinction between private limited companies and associations is thus that members of associations are not entitled to any share of profits in the entity.
The articles of association establishes the framework for the way in which an association must be organised, and the rules that apply to the association. Most of the regulation for associations under Norwegian law is not set out in written legislation. However, there are non-statuary principles developed over time that set forth certain requirements relating to associations, for example to establish whether an entity is qualified to register as an association.
In general, the annual meeting is the association's supreme body and all members have a right to attend, speak and vote at meetings. However, the general meeting is free to delegate this authority to other bodies, such as a board. The articles of association can stipulate other governance structures or the rights and obligations of the members, including the possibility of the various members not having the same rights.
Associations that carry on commercial activity are obliged to have a board. Other associations can stipulate in their articles of association whether or not the association shall have a board. If an association is involved in business activities then it is obliged to register in the Register of Business Enterprises.
The non-statuary principles for associations does not expressly address whether the head office/Secretariat must be located in Norway. However, in order to register the association in the Central Coordinating Register for Legal Entities (no: Enhetsregisteret), it is a prerequisite that the association is registered with a Norwegian address.
The association is not obliged to have its head office located in Norway to be registered in Norway. Nor is it required that the majority of the association's operations take place in Norway. However, in the event that the association does not have its head office or the majority of its operations in Norway, the association may not be considered Norwegian for certain purposes, e.g. with respect to court of domicile.
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Associations are not required to be registered in the Central Coordinating Register for Legal Entities. However, associations are required to register in order to obtain a business register number (no: organisasjonsnummer). A business register number is required when e.g. establishing a bank account in Norway, on sales invoices, public sector inquiries etc.
The obligation to pay the debts of the association is solely placed upon the association itself, i.e. the members and elected leaders are not responsible for the debts.
The association must be registered in the Central Coordinating Register for Legal Entities (free of charge).
4.2.2 Preliminary assessment An association offers a high degree of flexibility in terms of structuring the organisation and the decision-making model as UArctic's wish from time to time. The association will have members and UArctic may establish different "classes" of membership in the articles of association. Furthermore, this legal structure is beneficial as there are no requirements for a founding capital.
The fact that associations are not governed by general legislation may be viewed as a disadvantage as the legal framework is more vague and unclear compared to the situation for companies. Our assessment is however that this entail few issues in practise.
Our preliminary assessment is that an association could be a preferable legal structure for UArctic.
4.3 Foundation (no.: stiftelse)
4.3.1 Brief overview A foundation is an entity with a legal basis in a disposition, such as a gift or similar. The main characteristic of a foundation is that one has placed an object of economical values (most commonly money) at the independent disposal of a defined purpose, included but not limited to ideal, humanitarian, social, educational and economical activities. This means that foundations, as oppose to associations, do not have members. There are no limitations on the purpose of the foundations. Hence, the purpose can be of both national and international character.
Foundations are self-owned legal entities and can be either ordinary foundation or a commercial foundation, with the power to enter into contracts with third parties, and be a party in legal actions before the courts and official authorities.
Foundations are regulated by the Norwegian Foundation Act, and are submitted to supervision and control by the Norwegian Foundation Authority (no.: Stiftelsestilsynet). All foundations are required to register in the Norwegian Foundation Register.
To register the foundation, it is a prerequisite that the foundation has a Norwegian address. The head office of the foundation does not have be located in Norway for registration in Norway. Similar as for associations, it is not a requirement that the majority of the foundation's operations take place in Norway. However, in the event that the foundation does not have its head office or the majority of its operations in Norway, the foundation may not be considered Norwegian for certain purposes, e.g. with respect to court of domicile.
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However, it is statutory that at least half of the board members have residential address in Norway. An exemption is made for nationals that are parties of the EEA Agreement when they have a residential address in such a state.
All foundations shall have a founding capital of at least NOK 100,000 on their formation (NOK 200,000 for commercial foundations). As a general rule, distributions of the foundation's funds shall be made in accordance with the object of the foundation, and no distributions may be made to the founder(s).
Pursuant to the Foundation Act, every foundations shall have a board. The foundations may in its statutes prescribe that the foundation shall have other bodies than the board, e.g. have the authority to appoint board members, monitor the foundation's activities etc.
UArctic has many non-Norwegian stakeholders. Please note that "foundation" means different structures under different jurisdictions, so for example, US or UK individuals may think they know what a foundation is, but a Norwegian foundation is not the same as under Anglo-Saxon law.
4.3.2 Preliminary assessment The fact that foundations have a legal structure that do not comprise of members or owners makes it less suitable for UArctic. The decision-making model set forth in the Foundation Act offers limited flexibility. This is also the case for amending the foundation's statutes, as there are strict requirements for such changes, e.g. amending the governance structure or the objective of the foundation.
Furthermore, the Foundation Authority exercise a strong supervision of foundations and it may be administrative burdensome to structure UArctic as a foundation. It is also worth noting that the establishment requires a founding capital.
Our preliminary assessment is that we advise against establishing UArctic as a foundation.
5 REGISTRATION OF SECRETERIAT ONLY
An alternative to a legal incorporation of UArctic in Norway is to register a part of the organisation (e.g. its secretariat) as an "other legal entity" in the Brønnøysund Register Centre rather than a registration of the international organisation as such.
This has been done for the Arctic Economic Council Secretariat which is an international business association with their secretariat located in Norway. Such registration has advantages for an international business organisation with commercial companies as members.
This alternative would however not achieve the purpose of a more formal incorporation of the international organisation, and the lack of a clear and formal incorporation with a limited liability structure implies a potential risk for the governing bodies of UArctic, including unclear potential liability of its board members.
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