Self-regulatory organizations: legal entities on the edge of private and public law

Filatova-Bilous Nataliia

Author information
ORCID ID https://orcid.org/0000-0003-4243-3990

Published:

DOI: https://doi.org/10.69724/2786-8834-2024-2-2-58-82

Keywords: self-regulatory organisations, public authority, legal entities, compulsory membership, subject matter jurisdiction

Download PDF
Журнал. 2-й випуск. Облкадинка

Abstract

The article analyses the legal status of self-regulatory organisations (SROs). These organisations are formed among the actors of various types of professional and business activity (lawyers, doctors, auditors, accountants, etc.), but the notion ’self-regulatory organization’ has started to be used in legislation only recently. The main function of these organisations is to carry out self- regulation, i.e. to regulate the activity of their own members by adopting rules of conduct and monitoring compliance with them.

However, these organisations often acquire regulatory powers not only from their members, who voluntarily agree to be subject to their regulation, but also from the state, which delegates to them or recognizes their public regulatory powers. This creates a kind of paradox: on the one hand, SROs are established in a manner typical of private law entities. However, on the other hand, their activities acquire the features of administrative activity.

This raises a number of issues in law enforcement practice. Firstly, there are difficulties with the type of legal regulation that should be applied to the activities of these organisations – general permissive or special permissive. Secondly, the issue of court jurisdiction is ambiguous as well, i.e. which courts (administrative or commercial) have competence to resolve disputes arising between self-regulatory organisations and their members. Thirdly, the issue of compulsory membership in self-regulatory organisations is also quite acute, as this may lead to a violation of the right to freedom of association. Finally, the question of whether SROs are liable in the event of damage caused by them when exercising public authority is also ambiguous. There is a question concerning the conditions of their liability: shoud these be general conditions (Articles 1166–1167 of the Civil Code of Ukraine) or special conditions according to the rule of ’truncated’ composition, which is typical for the liability of public authorities (Article 1173 of the Civil Code of Ukraine).

This article provides a detailed analysis of these and other issues and outlines the ways to resolve them.

How to Cite

In accordance with DSTU 8302:2015:
Філатова-Білоус Н. Саморегулівні організації: юридичні особи на межі приватного і публічного права. Цивілістична платформа. 2024. № 2. С. 58-82. https://doi.org/10.69724/2786-8834-2024-2-2-58-82

According to the international style of APA:
Filatova-Bilous, N. (2024) Self-regulatory organizations: legal entities on the edge of private and public law. С. P. Journal, 2. https://doi.org/10.69724/2786-8834-2024-2-2-58-82 [in Ukrainian].

References

Legislation
1. Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/
EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council (’Unfair Commercial Practices Directive’). OJ L 149, 11.6.2005, p. 22–39 (accessed: 20.08.2024).
2. Modelnyi zakon [Model Law] O samorehulyruemykh orhanyzatsyiakh [On Self-Regulatory Organizations] 31.10.2007. URL: http://zakon1.rada.gov.ua/laws/show/997_i51/print1345066857909278 (accessed: 20.08.2024) [in Russian].
3. O rynke tsennykh bumah [On the Securities Market]: Federalnyi Zakon [Federal Law] ot 22.04.1996 №39-FZ URL: http://www.consultant.ru/document/cons_doc_LAW_10148/ (accessed: 20.08.2024) [in Russian].
4. O samorehulyruemykh orhanyzatsyiakh [On Self-Regulatory Organizations]: Federalnyi Zakon [Federal Law] ot 01.12.2007 N 315-FZ . URL : http://www.consultant.ru/document/cons_doc_LAW_72967/ (accessed: 20.08.2024) [in Russian].
5. Ob otsenochnoi deiatelnosty v Rossyiskoi Federatsyy [On evaluation activities in the Russian Federation]: Federalnyi Zakon [Federal Law] ot 29.07.1998 h. N 135-FZ. URL : http://www.consultant.ru/document/cons_doc_LAW_19586/
(accessed: 20.08.2024) [in Russian].
6. Pro administratyvnu protseduru [On Administrative Procedure]: Zakon Ukrainy [Law of Ukraine] vid 17 liutoho 2022 roku № 2073-IX. URL: https://zakon.rada.gov.ua/laws/show/2073–20#top (accessed: 20.08.2024) [in Ukrainian].
7. Pro enerhetychnu efektyvnist budivel [On Energy Efficiency of Buildings]: Zakon Ukrainy [Law of Ukraine] vid 22 chervnia 2017 roku №2118-VIII. URL: https://zakon.rada.gov.ua/laws/show/2118–19#Text (accessed: 20.08.2024) [in Ukrainian].
8. Pro finansovi posluhy ta finansovi kompanii [On financial services and financial companies]: Zakon Ukrainy [Law of Ukraine] vid 14 hrudnia 2021 roku №1953-IX. URL: https://zakon.rada.gov.ua/laws/show/1953–20#Text (accessed: 20.08.2024)[in Ukrainian].
9. Pro media [On Media]: Zakon Ukrain [Law of Ukraine] vid 13 hrudnia 2022 roku № 2849-IX. URL: https://zakon.rada.gov.ua/laws/show/2849–20#n1179 (accessed: 20.08.2024) [in Ukrainian].
10. Pro rynky kapitaliv ta orhanizovani tovarni rynky [On Capital Markets and Organized Commodity Markets]: Zakon Ukrainy [Law of Ukraine] vid 23 liutoho 2006 roku №3480-IV. URL: https://zakon.rada.gov.ua/laws/show/3480–15#Text (accessed: 20.08.2024) [in Ukrainian].
11. Pro zakhyst prav spozhyvachiv [On Consumer Protection]: Zakon Ukrainy [Law of Ukraine] vid 10 chervnia 2023 roku №3153-IKh. URL: https://zakon.rada.gov.ua/laws/show/3153–20#Text (accessed: 20.08.2024) [in Ukrainian].
12. Regulation (EU) 2022/2065 of the European Parliament and of the Council of 19 October 2022 on a Single Market For Digital Services and amending Directive 2000/31/EC (Digital Services Act) (Text with EEA relevance)OJ L 277, 27.10.2022, p. 1–102 (accessed: 20.08.2024).
13. Tsyvilnyi kodeks Ukrainy [Civil Code of Ukraine] vid 16.01.2003 r. №435-IV URL: https://zakon.rada.gov.ua/laws/show/435–15#Text (accessed: 20.08.2024) [in Ukrainian].
14. Uhoda pro vilnu torhivliu mizh Ukrainoiu ta Kanadoiu [The Free Trade Agreement between Ukraine and Canada] ratyfikovana Zakonom Ukrainy vid 10 kvitnia 2024 roku №3627-IX. URL: https://zakon.rada.gov.ua/laws/show/124_001-23#Text (accessed: 20.08.2024) [in Ukrainian].

Draft Law of Ukraine
15. Pro samorehuliuiuchi orhanizatsii [On Self-Regulatory Organizations] №4841 vid 16.09.2009r. URL: http://w1.c1.rada.gov.ua/pls/zweb_n/webproc4_1?id=&pf3511=35867 (accessed: 20.08.2024) [in Ukrainian].
16. Pro samorehuliuvalni orhanizatsii [On Self-Regulatory Organizations] №9015 vid 18.07.2011r. roku URL: http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=40953 (accessed: 20.08.2024) [in Ukrainian].
17. Pro samorehuliuvalni orhanizatsii [On Self-Regulatory Organizations] №4841-d vid 23.07.2010 r. URL: http://w1.c1.rada.gov.ua/pls/zweb_n/webproc4_1?id=&pf3511=38355 (accessed: 20.08.2024) [in Ukrainian].
18. Pro samorehuliuvalni orhanizatsii [On Self-Regulatory Organizations] №1444 vid 11.12.2014r. URL: http://w1.c1.rada.gov.ua/pls/zweb2/webproc34?id=&pf3511=52919&pf35401=319474 (accessed: 20.08.2024) [in Ukrainian].
19. Pro samorehuliuvalni orhanizatsii [On Self-Regulatory Organizations] №10052 vid 15.02.2012 r. URL: http://w1.c1.rada.gov.ua/pls/zweb2/webproc4_1?pf3511=42550 (accessed: 20.08.2024) [in Ukrainian].

Cases
Case law
20. Postanova KAS VS [Resolution of the Administrative Court of Cassation of the Supreme Court] 08.09.2020 №821/1227/18. URL: https://reyestr.court.gov.ua/Review/91504014 [in Ukrainian].
21. Postanova Velykoi Palaty Verkhovnoho Sudu [Resolution of the Grand Chamber of the Supreme Court]. 29.08.2018 №804/11334/15 URL: http://reyestr.court.gov.ua/Review/76673367 [in Ukrainian].
22. Postanova Velykoi Palaty Verkhovnoho Sudu [Resolution of the Grand Chamber of the Supreme Court]. 29.03.2018 № 640/12325/15-t s . URL: http://reyestr.court.gov.ua/Review/73304946; [in Ukrainian].
23. Postanova Velykoi Palaty Verkhovnoho Sudu [Resolution of the Grand Chamber of the Supreme Court]. 07.11.2018 №607/3128/16-ts URL: http://reyestr.court.gov.ua/Review/77870763 [in Ukrainian].
24. Sigurdur Einarsson and Others v. Iceland, №39757/15. 04 June 2019. URL: https://hudoc.echr.coe.int/eng?i=001–193494 (accessed: 20.08.2024).
25. O. V. R. v. Russia (dec.), № 44319/98. 20 June 2000. URL: https://hudoc.echr.coe.int/?i=001–5354 (accessed: 20.08.2024).
26. NASD v. SEC (431 F.3d 803 (D. C. Cir. 2005) (accessed: 20.08.2024) (in English).
27. Lebron v. National Railroad Passenger Corp. 513 U. S. 374 (1995) (accessed: 20.08.2024).
28. Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198, 206–07 (2d Cir. 1999)(accessed: 20.08.2024).
29. D’Alessio v.NYSE, Inc., 258 F.3d 93, 106 (2d Cir. 2001) (accessed: 20.08.2024) (in English).
30. Barthold v. Germany, № 8734/79. 25 March 1985. URL: https://hudoc.echr.coe.int/?i=001–57432 (accessed: 20.08.2024).
31. Austin Mun. Sec., Inc. v. NASD, Inc., 757 F.2d 676, 697 (5th Cir. 1985)(accessed: 20.08.2024).
32. Weissman v. NASD, Inc. (Weissman IV), 500 F.3d 1293, 1299 (11th Cir. 2007)(accessed: 20.08.2024).

Bibliography
Authored books
33. Filatova, N. Yu. Samorehulivni orhanizatsii yak subiekty tsyvilnoho prava [Self-regulatory organizations as subjects of civil law]: monohrafiia [monograph]. Kharkiv: Pravo, 2016. 240 s. [in Ukrainian].
34. Short, Jodi Lynne. From command-and-control to corporate self-regulation: How legal discourse and practice shape regulatory reform / Short, Jodi Lynne. University of California, Berkeley, 2008.
35. Self-Regulation in the EU Advertising Sector: A report of some discussion among Interested parties: Participants Terms of Reference Agenda Presentations EASA papers // Health&Consumer Protection Directorate General. – 200. URL:
http://ec.europa.eu/consumers/overview/report_advertising_en.pdf(accessed: 20.08.2024).
36. Self-regulation in England and Wales // NEWGOV, New Models of Government: Integrated Project. Priority 7: Citizens and Government in the Knowledge-based Society // Richard Mumford and Jaime Arancibia/ – 2007 . URL: http://www.eu-newgov.org/database/DELIV/DLTFIbD09a_Final_Chapters_on_self-regulation_England_and_Wales.pdf (accessed: 20.08.2024).
37. Self-regulated professions: Balancing competition and regulation – Competition Bureau Analysis. 2007. URL: http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/vwapj/professions%20study%20final%20e.pdf/$file/professions%20study%20final%20e.pdf (accessed: 20.08.2024).
38. Model Rules of Professional Conduct of the American Bar Association (ABA), Preamble. URL: https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/model_rules_of_professional_conduct_preamble_scope/ (accessed: 20.08.2024).
39. ICSA (International Council of Securities Associations). 2006a. «Best Practices for SROs» http://www.icsa.bz/pdf/ICSABestPracticesSRO.pdf (дата звернення: 20 серпня 2024 року).
40. Fabrizio Caffaggi. Self-regulation as a Regulatory strategy – a Comparative Law Perspective: table of findigs / Fabrizio Caffaggi // NEWGOV, New Models of Government: Integrated Project. Priority 7: Citizens and Government in the Knowledge-based Society. – 2007. URL: http://www.eu-newgov.org/database/DELIV/DLTFIbD09_Final_Chapters_on_self-regulation_Introduction.pdf(accessed: 20.08.2024).
41. Ellinoora Peltonen. Self-regulation in Finland / Ellinoora Peltonen // NEWGOV, New Models of Government: Integrated Project. Priority 7: Citizens and Government in the Knowledge-based Society. – 2007. URL: http://www.eu-newgov.org/database/DELIV/DLTFIbD09b_Final_Chapters_on_self-regulation_Finland.pdf (accessed: 20.08.2024).
42. Carson, John W., Self-Regulation in Securities Markets (January 1, 2011). World Bank Policy Research Working Paper No. 5542, 6. Available at SSRN: https://ssrn.com/abstract=1747445
43. Anthony Ogus and Emanuela Carbonara, Self-regulation (2011), 231. URL: http://www.fratellipedrini.com/wp-content/uploads/2012/01/carbonara1.pdf (дата звернення: 20 серпня 2024 року) [in Ukrainian].
44. Anenson, T. (2007). Absolute Immunity from Civil Liability: Lessons for Litigation

Lawyers.
Edited books
45. Fylatova N. Yu. (2019). Samorehulyruemye orhanyzatsyy: problemy opredelenyia pravovoho statusa. Ocherky prava kompanyi [Self-regulating organizations: problems of determining the legal status. Essays on the law of companies: collection of articles] : sb. st. / otv. red. І. V. Spasybo-Fateeva. Kharkov : Еkus [in Russian].

Journal articles
46. Karmel, Roberta S., Should Securities Industry Self-Regulatory Organizations be Considered Government Agencies? Stanford Journal of Law, Business, and Finance, Forthcoming; Brooklyn Law School, Legal Studies Paper No. 86., 20.
Available at SSRN: http://ssrn.com/abstract=1128329 (accessed: 20.08.2024).
47. Hammond, Emily, Double Deference in Administrative Law (September 9, 2016). Columbia Law Review, November 2016, Forthcoming; GWU Law School Public Law Research Paper No. 2016–46; GWU Legal Studies Research Paper No. 2016–46. Available at SSRN: https://ssrn.com/abstract=2837077 (accessed: 20.08.2024)
48. Filatova-Bilous, N. Ju. Online Platforms and New Challenges for Modern Law on E-Commerce. Проблеми законності = Problems of legality. 2023. Вип. 162. С. 312–329 [in Ukrainian].

Аrticle online
49. Delimatsis, Panagiotis, The Enforcement of Transnational Private Regulation – The Case of Professional Services (October 17, 2011). TILEC Discussion Paper No. 2011–045. Available at SSRN: https://ssrn.com/abstract=1945193 or http://dx.doi.org/10.2139/ssrn.1945193
50. Black, Barbara, Punishing Bad Brokers: Self-Regulation and FINRA Sanctions (July 31, 2013). Brooklyn Journal of Corporate, Financial and Commercial Law, 2013, 10–11. Available at SSRN: https://ssrn.com/abstract=2316918
51. Springer, Craig J., Weissman v. NASD: Piercing the Veil of Absolute Immunity of an SRO under the Securities Exchange Act of 1934 (September 15, 2008). Delaware Journal of Corporate Law (DJCL)
52. Simona Rodriquez. Self-regulation as a regulatory strategy: The Italian legal framework / Simona Rodriquez // Utrecht Law Review. 2007. Volume 3, Issue 2 (December). 2007 URL: http://www.estig.ipbeja.pt/~ac_direito/simona.pdf.

Websites
53. Sud pereviryt na konstytutsiinist zakonodavchyi prypys shchodo obov’iazkovoho chlenstva advokativ u Natsionalnii asotsiatsii advokativ Ukrainy. URL: https://ccu.gov.ua/novyna/sud-pereviryt-na-konstytuciynist-zakonodavchyy-prypys-
shchodo-obovyazkovogo-chlenstva (accessed: 20.08.2024) [in Ukrainian].

© Civil Platform. All rights reserved. 2025