18.03.2004

Unlawful resolution

Legal brief

The task group resolution adopted by the March 13 conference was condemned as unconstitutional both by the Democracy Platform and several other opponents. This short note analyses this issue from a lawyer’s point of view. Since I am an academic, not a practising, lawyer, it cannot be taken as a formal ‘opinion’.

• The constitutional objection to the resolution is that it is inconsistent with article E1 of the Socialist Alliance constitution: “The local Socialist Alliance will have the responsibility for all elections contested by the Socialist Alliance within its area (eg, council, Westminster, etc) and for all arrangements regarding local candidate, agent, treasurer, in line with Socialist Alliance requirements nationally.”

This provision is categorically incompatible with the task group resolution’s provision that local Socialist Alliance candidates must be previously agreed by local and national Respect.

• The constitution can be amended by simple majority at a special meeting (article C2). However, the resolution was not presented as a constitutional amendment, and being a privilegium - a decision directed to a single case, that of the May 2004 local elections - could not in any case be considered to be a constitutional amendment. Nor did its supporters argue that it was a constitutional amendment.
• Its supporters argued that the resolution was constitutional on two grounds: (1) According to articles C1-C3, national policy is to be decided by conference or, between conferences, the executive. This is a decision on national policy. (2) Article E1, quoted above, contains the phrase “in line with Socialist Alliance requirements nationally” and the resolution fixes “Socialist Alliance requirements nationally”.
• The first argument is clearly indefensible as a matter of construction. Generalia specialia non derogant: when a relationship is expressly regulated by specific provisions, it is illegitimate to read general words elsewhere in the text as overriding the specific provisions. Opponents of the resolution argued, correctly, that an additional point on this is that articles C17 (point 3), E2 and E3 provide expressly for special powers of the executive and appeals committee to deal with disputes about election nominations. It is quite clearly illegitimate in the face of these special powers to construe the general powers of conference and executive in relation to national policy as extending to a power to delegate decision-making to Respect bodies.
• The second argument would be defensible if the task group’s resolution had been: “That the Socialist Alliance will not stand candidates in the May 2004 local elections.” But this is not the resolution. The resolution does not proceed on Socialist Alliance requirements, but by delegating the decision-making process to Respect bodies. This is a different matter and not one which can plausibly be brought under the words from article E1.
• An unincorporated association - which is what, in law, the Socialist Alliance is - is constituted by a multi-party contract between its members. Unconstitutional action is a breach of contract and can be restrained by injunction.
• The assets of the organisation are held by those officers in whose names they are vested in trust for the members at the time, subject to their contractual rights inter se: Re Recher’s Will Trusts [1972] Ch 526. The use of assets of the organisation (such as the name and, arguably, the electoral registration) contrary to the constitution therefore exposes the individual officer or officers in question to liability for breach of trust.
• It could, however, be argued that, though unconstitutional, the resolution was nonetheless legally binding as being adopted by a clear majority at a conference. This would involve invoking from company law what is called the Duomatic principle - from the case of Re Duomatic Ltd [1969] 2 Ch 365: where a decision is made informally but unanimously (or, arguably, by a sufficient majority), it is nonetheless effective.
• The difficulty with this argument is that - to extend the use of the company law analogy - the resolution is clearly a “fraud on the minority”, which would not be binding, however constitutionally it had been adopted. The clearest way to explain this is from one of the old leading cases which presents a close analogy to the SWP’s conduct: Menier v Hooper’s Telegraph Works (1874) LR 9 Ch App 350. In this case the defendant, a majority shareholder in a company, settled for its own benefit the company’s lawsuit against a rival company, and then procured the company’s directors to abandon the lawsuit. The defendant was held to be liable to an action by an individual minority shareholder. The majority is entitled to decide to discontinue the project for which the company was formed; but they cannot sell off the assets to a rival and keep the whole benefit for themselves at the expense of the dissentient minority.
• Applying this principle to the Socialist Alliance, the SWP means to discontinue the project formed by the Socialist Alliance constitution and People before profit and replace it with the rival project of Respect. They are entitled in principle to insist that the Socialist Alliance be wound up and take their share of the assets. What they are not entitled to do is to stultify it for the benefit of Respect, while keeping the name and electoral registration of the Socialist Alliance in existence as - in effect - an asset of the SWP.

It may seem surprising that these legal rules are, in fact, consistent with the results which would be achieved by reasoning from basic democratic principles. It should not be. The rules were not designed to regulate the relations between classes, but to protect the interests of capitalists against misconduct by other capitalists. The courts are understandably more solicitous of capitalists’ democratic rights - which may involve large sums of money - than of democratic rights in general. The workers’ movement should copy this democratism of the capitalists among themselves, not - as the SWP does - the bureaucratic dictatorships which they promote over the working class.