Restrictions to Private Party Financing: A Matter of Equal Chances Only?

by Nicos C. Alivizatos, Member of the Venice Commission

Abstract

Restrictions to private party financing, combined with the obligation to disclose donations, are now a common place in almost all European democracies. Save minor objections, pertaining to technical details, the constitutionality of the relevant provisions has as a general rule been upheld. On the contrary, on the other side of the Atlantic, they have been found unconstitutional, with Citizens United v. FEC (2010) giving the final blow to party financing regulation. The question is not only theoretical: should freedom of speech considerations prevail, as held by the U.S. Supreme Court? Or is it just a question of equal chances in electoral matters, as suggested by the ECtHR?

At the outset of her widely commented opinions “on de-oligarchisation” in Ukraine, Georgia and Moldavia,  the Venice Commission made a fundamental distinction between on the one hand a “systemic” approach, which involves the adoption and strengthening of legal tools in many fields of law, such as media law, antitrust, laws on political parties, taxation and others, and the so-called “personal” approach, on the other, which seeks to identify the persons who presumably exercise a distractive influence on the State and the decision making process; for that purpose,  various criteria have been suggested,  such as wealth, media ownership and others. The Venice Commission privileges the first approach.

In both approaches however the regulation of private party financing occupies a primordial place. Since no political party may operate and be efficient without substantial financial resources, and to the extent that neither public funding nor member fees suffice, gathering money at all costs from private sources is inevitable.

In spite of its importance for the fairness of the democratic process, private party financing attracted the attention of national legislators only lately. The same roughly applies to constitutional scholars.  In a report he prepared for the Venice Commission in the year 2000, an eminent French professor, Jacques Robert, expressed his deep surprise.

It is astonishing, he observed, that in many countries the main legislation governing the funding of political parties passed only a few years ago. As a result there is fairly little case-law  […] in this field. This situation, he added, does not facilitate an in-depth study of the problems posed.

That long-lasting indifference on the part of public authorities and constitutional theorists left the ground open for all kinds of dubious  and undercover practices, in the fringe of legality, if not openly unlawful, which led in the 1980s and 1990s to a series of well-known scandals. It was only then that strict rules started to be adopted in almost all European countries. In spite of significant variations, these rules have in common some fundamental characteristics:

*First, they almost all contain disclosure rules, in the name of the principle of transparency; donations are legal only if they are duly publicized in due time. As observed, the relevant rules are supposed to enable the public to have access to information on private interests “potentially motivating party politics”.

*Second, many provide for expenditure limits by the political parties, for the purpose of limiting the need of funds exceeding legitimate amounts. And

*Third, they almost all set limits if not bans to contributions to political parties or to individual  candidates for public office,  that is to the maximum permissible amounts, including prohibition of anonymous and foreign contributions, as well as limits on the ability of corporations to make all kinds of donations.

Furthermore, the use of State resources for private purposes is forbidden along with the use  of party funds for the same purposes. It was only last week that the US House of Representatives expelled a Republican Congressman for stealing campaign funds for private purposes. It did so according to the “Expulsion Clause” of the American Constitution, which provides that a 2/3 supermajority is requested thereof in case of “disorderly behavior” by a member of Congress ( 1.12.2023, George Santos).

In Europe these restrictions have in general been upheld by the Courts, with one major exception, that of the German Constitutional Court, which has expressed on various occasions serious reserves. That Court’s  jurisprudence on political parties goes back in the 1950s and refers not only to party financing but to party operation, under Article 21 of the German Constitution and the law on political parties. Last January, for instance, the Court of Karlsruhe held that the increase of the annual total of State funds for the financing of political parties, the so-called “absolute limit”, for the year 2018, was unconstitutional to the extent that it violated the principle that parties be sufficiently free from State interference.

On the contrary, save some rather secondary provisions, the constitutionality of legal restrictions to party financing has been upheld in most other European countries.    As early as 1998, the European Court of Human Rights, in a case involving the disqualification of a candidate elected as deputy  in France with the UDF a center to the right party (Union pour la démocratie française ) in the general election of May 1993 (Jean-Pierre Pierre Bloch) found that exceeding by 25% the statutory ceiling provided for by the French  Electoral Code   for campaign expenditures was a legitimate reason for him to forfeit  his seat.

That positive attitude toward party financing regulation was  not the case on the other side of the Atlantic. Indeed, in the United States, contributions to political parties and to candidates for public office are considered as speech and fall therefore under the ambit of the First Amendment of the American Constitution. Not surprisingly, in 1976, in the judgment it rendered in the  Buckley v. Valeo  case (424 US 1), the US Supreme Court invalidated restrictions to party spending, that were very similar  to those enacted since long ago in France and other European countries. The most important, judgment, however, rendered by the same Court on that issue is more recent: I am referring to Citizens United v. Federal Election Commission, a landmark decision, which dates back to 2010 (558 US 310), in which a majority of five  justices held that the First Amendment prohibits the government from restricting expenditures for political campaigns by commercial corporations, as well as by non-profit institutions, labor unions and other associations. I will insist on the reasoning of that judgment, because I consider it tackles with the general problematic of our Conference.

The case began after Citizens United, a conservative not-for-profit think tank, sought to advertise on national television a film critical for  Hillary Clinton, the then Democratic presidential candidate. Broadcasting that film would have violated a 2002 law, the Bipartisan Campaign Reform Act, which prohibited not only corporations but also non-profit associations, such as CU from making “electioneering communication” 30 days before a primary election and 60 days before an election. Associate justice Anthony Kennedy, at the  time the swing vote between the four conservative and the four liberal members of the Court, wrote the majority’s opinion, which may be summarized as follows:

If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech.

More concretely, the majority’s reasoning went as follows: since the First Amendment does not distinguish between individuals and associations, no restrictions can be imposed to the latter. All the more that, according to the Court’s longstanding jurisprudence, no prohibitions of speech based on the speaker’s identity can be allowed.  In relation to the risk of corruption, that is the so-called “distorting effect” of large corporate expenditure, the majority argued that it was not the government’s business to determine whether large donations distorted the people’s perceptions; as held,

there is no such thing as too much speech,

since the public has the right to have access to all information and to appreciate the reliability and importance of information. It is worth noting that the Court did not invalidate the law’s disclosure provisions, neither the prohibition of financing by foreign sources.

The Court’s dissent was written by Justice John Paul Stevens, who was joined by the other three liberal justices, Ginsburg, Breyer and Sotomayor. As argued by the late Stevens, the Court’s ruling

threatens to undermine the integrity of elected institutions across the Nation. Because, he added, a democracy cannot function effectively when its constituent members believe laws are being bought and sold.

According to the minority’s reasoning, it would be catastrophic to deny Congress the power to intervene against “the improper use of money to influence [the outcome of an election]”; such absence of regulation, would amount to a denial  of the Nation’s right to “self-protection”. In Steven’s view, not only corruption, but also the “appearance of corruption” in elections should be avoided; as indicated by opinion polls, more than 80% of the public considered that corporation expenditures is a method used to gain unfair legislative access.  Legal entities, he concluded, are not “We the People” for whom the American Constitution was established.

Highly controversial, Citizens United was harshly criticized. For Barack Obama, the then president of the United States, it “strikes at our democracy itself”, since it “gives the special interests and their lobbyists even more power in Washington, while undermining the influence of average Americans who make small contributions to support their preferred candidates”, For Laurence Tribe, the eminent Harvard professor of constitutional law,

talking about a business corporation as merely another way that individuals might choose to organize their association with one another to pursue their common expressive aims is worse than unrealistic; it obscures the very real injustice and distortion entailed in the phenomenon of some people using other people’s money to support candidates they have made no decision to support, or to oppose candidates they have made no decision to oppose.

I am sure that, for those of you who are familiar with the milestones of American constitutional history, that criticism reminds us of justice Oliver Wendel Holmes’ famous dissent in Lochner, another unfortunate decision of the US Supreme Court, which  found, in 1905, that a New York State statute that prescribed maximum working hours for bakers violated the bakers’ right to freedom of contract under the Fourteenth Amendment to the U.S. Constitution. According to Holmes widely celebrated since then phrase,

the Constitution is not intended to embody a particular economic theory, whether of paternalism and the organic relation of the citizen to the state or of laissez faire. It is made for people of fundamentally differing views ….

To put it in a more abstract way, beyond the issue  of judicial self-restraint and stare decisis, raised in his concurrent opinion by chief justice Roberts, the central question at stake in Citizens United is whether the constitution privileges formal versus substantial equality. As stated  by John Rawls, for many the most important political philosopher of our times,

what is fundamental is a political procedure which secures for all citizens a full and equally effective voice in a fair scheme of representation. Such scheme is fundamental because the adequate protection of other basic rights depends on it. Formal equality is not enough (Political Liberalism, p. 361).

The other fundamental question raised by the same American jurisprudence is the conflict between the freedom of speech, on the one hand, and democracy, on the other. As we know, the first is revered in the United States as the basic freedom from which all others depend. Democracy, on the other hand is inconceivable if the equality of chances for all candidates is not guaranteed. In my opinion, it  is the duty of legislators to secure that equality, without which, to remind you of George Orwell’s  well known expression, some candidates are more equal than the others.

Allow me to believe that the reasons why, as opposed to Europe, the freedom of speech prevails over democracy and equality of chances on the other side of the Atlantic, are to be found in history. The United States have not experienced on their soil anything approaching to an invasion by a foreign country, even less to foreign occupation. Moreover, they have gone through  for long periods of their history  acute inequalities, which have led to major judicial conflicts over issues that most European countries have settled long ago. It would not, therefore, be inaccurate to say that the different perception of fundamental constitutional values in Europe and America is closely related to their different histories and to their sometimes contradictory constitutional traditions.

Allow me to conclude with a final remark, the following:  along with Oliver Holmes I am of those who believe that Constitutions do not embody a particular economic theory. I consider, nevertheless, that they presuppose if not a moral theory, at least several fundamental moral principles, such as the equality of chances in the electoral process principles that cannot be overpassed without endangering the peaceful coexistence of  people of fundamentally differing views ….

 

Cologne, December 8, 2023

 

 

 

 

 

 

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