A two-member Lahore High Court bench on Tuesday set aside the September 2024 single-bench ruling that had struck down the federal government’s policy regulating foreign funding to NGOs and non-profit organisations — fully restoring the Policy for Local NGOs/NPOs Receiving Foreign Contributions 2022 and reviving the requirement that security agencies grant clearance before any civil society organisation can sign an MoU with the Ministry of Economic Affairs to receive foreign contributions. Petitioners including the Human Rights Commission of Pakistan (HRCP), Dastak, and the Cecil and Iris Chaudhry Foundation (CICF) immediately declared their intent to challenge the decision before superior courts.
The Lahore High Court on Monday set aside an earlier ruling that had struck down a federal government policy introduced in 2022 to regulate foreign funding of non-governmental and non-profit organizations. A two-member bench comprising Justice Chaudhry Muhammad Iqbal and Justice Syed Ahsan Raza Kazmi overturned that decision, stating that policy-making falls within the executive domain and should be protected from undue judicial interference. The court restored the Policy for Local NGOs/NPOs Receiving Foreign Contributions 2022. The decision followed appeals filed by the federal government after the earlier judgment.
The bench allowed all three intra-court appeals filed by the federation — reversing a ruling that civil society organisations had celebrated as a landmark protection of their operating space. The 2022 policy, approved by the federal cabinet in November 2022 under the Ministry of Economic Affairs (MoEA), now stands as valid and enforceable.
The policy mandated that only an authorised officer, not below the rank of BS-21, from the Ministry of Economic Affairs could approve or reject MOU requests from NPOs and NGOs. It also required security agencies to grant clearance before any MOU could be signed.
Under the restored policy, every NGO or NPO in Pakistan that receives or intends to receive foreign contributions must:
- Execute a formal MoU with the Ministry of Economic Affairs (MoEA)
- Obtain approval from a BS-21+ MoEA officer for that MoU
- Obtain security agency clearance before the MoU can be signed
- Submit to ongoing monitoring, accountability, and utilisation scrutiny of foreign funds
Civil society organisations that had been operating without these approvals following the September 2024 court ruling must now re-engage with the MoEA registration and clearance process.
The September 2024 single-bench judgment by Justice Asim Hafeez had gone further than any previous court ruling in protecting civil society operating space. The court set aside the powers granted to security agencies, stating: “The role proposed for the security agencies through the Policy, having no force of law, manifests commission of gross illegality, unreasonableness, and unwarranted intrusion in the exercise of permissible fundamental rights.” The order stated that allowing superintendence by security agencies, without legislative authorisation, negated the principle of constitutional democracy. The Federal Cabinet is constitutionally obligated to adhere to the principle of supremacy of the legislature.
That judgment also found the policy violated Article 18 of the Constitution, which guarantees freedom of trade and business. The two-member bench has now overridden all of these findings, taking the position that executive policy-making does not require separate legislative authorisation.
Advocate Saqib Jillani, counsel for the petitioners, termed the outcome of the intra-court appeal “a very bad decision,” signalling the petitioners’ intent to challenge it before superior courts. He maintained that the 2022 policy, like the earlier 2013 framework struck down by courts, lacked statutory backing and violated constitutional protections, including the rights to freedom of association and business. He further contended that the policy places unreasonable restrictions on the functioning of civil society organisations and infringes Article 17 of the Constitution, which guarantees freedom of association.
Michelle Chaudhry, President of the Cecil & Iris Chaudhry Foundation, raised concerns over the policy’s impact on civil society, calling the framework “bureaucratic, opaque, and discretionary,” with extensive controls over registration, renewal, and foreign funding approvals. She added that such mechanisms risk restricting organisations working on sensitive issues, including human rights, governance accountability, and minority rights.
The policy was apparently a step taken to deal with the difficulties encountered in the wake of the classification of the country in the non-compliant category under the FATF regime. A deputy attorney general argued before the court that the role of security agencies was limited to rendering assistance regarding matters touching national security and terrorism financing issues, and the absence of such checks would exacerbate difficulties for the government in the context of the FATF regime.
Pakistan exited FATF’s grey list in October 2022 — ironically, the same month the NGO funding policy was finalised. The government’s argument that the policy remains necessary for FATF compliance and AML/CFT obligations continues to carry institutional weight, even as civil society contends the same objectives can be achieved through rights-compliant legislation.
Hina Jillani, former HRCP chairperson, pointed out that a similar attempt was made by promulgating a policy approved by the Economic Coordination Committee of the Cabinet in 2013 for the regulation of organisations receiving foreign contributions, but that policy was also invalidated by courts.
The LHC majority’s restoration of the 2022 policy is now the third act in this decade-long cycle: the executive introduces a cabinet-approved NGO funding policy, courts strike it down for lacking legislative backing, the executive reintroduces a new version. The absence of a coherent, rights-aligned legal framework continues to give administrative bodies broad discretionary authority. State institutions are increasingly relying on administrative mechanisms — delaying approvals, freezing bank accounts, and subjecting organisations to repeated scrutiny. These measures have disproportionately impacted rights-based organisations, forcing many to redirect resources toward compliance, scale down their work, or step away from advocacy altogether.
With petitioners publicly committing to challenge before superior courts, the case now heads to either the Supreme Court of Pakistan or could be referred to a larger LHC bench, depending on the procedural route taken. The core constitutional question — whether the federal cabinet can regulate civil society organisations through executive policy without legislative authorisation — remains unresolved at the apex level. Until the Supreme Court rules, the 2022 policy stands as valid law, with full enforcement authority including mandatory security agency clearance for all NGO MoUs with the MoEA.