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Legal Aspects of Church Disputes

Description: Consultation on Conflict Resolution & Mediation, July 19 2003
        Author: Lee Min Choon

LEGAL ASPECTS OF CHURCH DISPUTES

(Consultation on Conflict Resolutions & Mediation, July 19, 2003)

by Lee Min Choon

1. Introduction

Wherever there are people, there will be disagreements or disputes. It is no different in the church. In recent memory, we have seen the proliferation of church groups as a result of disputes. We also hear of disputes so severe as to cripple the unity and witness of a particular church.

This paper accepts that disputes in the church is inevitable and seeks to address the legal dimensions of a church dispute. The issues of how disputes can be avoided and/or resolved in the Christian fashion are not within the scope of this paper and should be addressed elsewhere.

Before we go into the legal aspects of church disputes, it is necessary to point out that the legal position in a particular dispute will vary according to the type of church that is involved. From the point of view of constitutional structure, we have 4 categories of churches in Malaysia. As we go into our discussion, we need to address the legal dimensions as they manifest themselves in a particular type of church.

The 4 types of churches are as follows:

  • Churches that are bodies corporate. These are the older churches that are established by law, ie. Acts of Parliament or pre-Merdeka enactments. Examples of such churches will be Roman Catholic, Anglican, Methodist and Presbyterian.
  • Registered societies. A number of churches register themselves as societies under the Societies Act. These are the newer churches that have come into Malaysia after Merdeka, eg. Baptist, EFC and Pentecostals.
  • Companies. Some churches incorporate themselves as companies under the Companies Act, eg. FGA.
  • Unregistered churches. Some churches do not register themselves in any form at all. They meet under a chosen name and conduct themselves according to their own traditions, eg. Brethren.

What kind of legal rights the members of a church have in the event of a dispute depends on how the church is constituted. Thus, if a dispute arises in a church that is a registered society, then the Societies Act will apply.

As this paper is prepared for NECF, the following discussion will leave out the first category of churches (ie. churches established by law) as these churches are members of CCM and not NECF.

 

2. Dispute Resolution Mechanisms

One area to consider is what legal rights or recourse are available to a church or the members of a church in the event of a dispute. Differently constituted churches have different legal procedures for resolving conflicts.

a) Internal Procedures

A church may have a conflict resolution procedure written into its constitution or in the rules that are commonly accepted as binding on all members. In such a case, members must follow the procedure laid down in the event of a dispute.

b) Arbitration

Arbitration is usually an amicable form of conflict resolution. However, for arbitration to arise, both parties to a dispute must agree to arbitration. The constituent document of a church may also provide for arbitration. In such a case, arbitration must be resorted to before other legal approaches.

c) Litigation

This is the process of resorting to legal action through the Courts in order to resolve a dispute. The Courts have jurisdiction to hear all kinds of disputes that citizens may bring before them. This includes disputes in the church. In the process of deciding a dispute, the Court may have to look at the religious teachings of a church but the Court nevertheless can arbitrate in a church dispute. In all of the legal procedures outlined below, the Courts are called on to decide a dispute where a legal right is infringed. The Courts do not interfere in disputes of a personal nature.

For churches that are registered as companies, members may sue fellow members or the leadership of the church by resorting to the legal processes provided under Companies Law. For example, members can apply for Injunctions restraining the church or its leadership from performing a certain action. Members can also apply under Section 181 of the Companies Act to complain that they have been unjustly oppressed and ask the Court to make orders for the just management of the company-church. Similar rights are also available to members under a procedure called "Fraud on the Minority." In certain cases where a dispute cannot be justly resolved, the Court may order the dissolution of a company-church.

For churches registered as societies, members can also sue fellow members or the leadership in the Courts. In such suits, it is the legal rights of a member that must be at stake. The rights of members of a society-church are defined in the Societies Act and in the Rules and Constitution of the society-church. In such suits, members may apply for Injunctions, any relevant Court orders and even seek the dissolution of the society-church.

For unregistered churches, legal action may also be resorted to in order to resolve disputes. The legal principles that will be applied will be the common law rules relating to informal associations and individual rights based on contract, tort, trust, etc. For unregistered churches, there is usually the additional difficulty of identifying the body that is to be sued but this is not an insurmountable problem.

d) Observations

    1. As can be seen from the above, there is a host of legal rights and procedures available to members of a church in the event of a dispute. Being registered or not will not prevent a church from being sued in Court by its members.
    2. The possibility of litigation brings with it the danger of judicial interference in the affairs of a church.
    3. Where the Court rules on a dispute in a church, it may not decide on the basis of biblical principles but on the basis of legal (secular) rights.

 

3. Post-Dispute Settlements

Besides the procedures for dispute resolution, the other area to consider is the effect of the resolution of a dispute. A dispute may be resolved either positively or negatively. An example of a positive resolution is reconciliation. Examples of negative resolution would be separation of the disputing parties, dissolution of the church, etc. With either form of resolution, certain legal consequences would follow.

    a.   Expulsion/Reinstatement

A party to a dispute may find himself excluded from a church as a result of litigation. A case may arise where a leadership faction goes to Court to ask that the expulsion of another party from the church be confirmed. Conversely, an expelled party may go to Court to seek a ruling that his expulsion was unjustified. In such a case, a successful outcome of the lawsuit would see the party being reinstated as a member of the church by reason of the Court order.

  1. Dissolution
  2. As a worst-case scenario, a church registered as a society or as a company could find itself dissolved by an order of the Court. For companies, if a member files a Section 181 action, the Court has dissolution of the company-church as one of its options. A member could also seek the winding-up of the company-church on just and equitable grounds, etc. A church registered as a society could also be de-registered on a variety of grounds, the most common being that statutory requirements were not complied with, eg. submission of accounts and returns, failing to hold general meetings, etc. Such non-compliance by the society-church could be used as a ground for complaint by a disgruntled member to the authorities and result in the dissolution of the church.

  3. Restructuring
  4. In the case of a company-church, the Court in a Section 181 action could order a restructuring in the management of the company-church or order alterations in its leadership. The duly appointed leadership of the church could be replaced by virtue of Court orders. Such replacement of the leadership would not be done on the basis of biblical criteria but on legal grounds.

  5. Division of Assets

In the case of dissolution of a company-church or a society-church, a question will arise as to the treatment of the assets of the church and the ownership of the residual property of the church. This is perhaps one of the most problematic of areas. In the case of a company-church, the assets has to be handled by the Offical Assignee, a government official. He will realize the property (ie. convert it into cash) and pay off the liabilities. Whatever remains will be distributed among the shareholders according to the proportion of their shareholding.

In the case of a society-church, whatever assets of the society will belong equally to all its members. In this case, the Registrar of Societies will undertake the liquidation of the assets of the church and distribute it equally among its members. In such a case, disputing members may share in the assets of the church unless it is proven that a particular party is not a member of the church at the time of dissolution.

Even in the case of an unregistered church, if a division results in the parting of ways of factions in the church, the question of ownership of the assets of the church will also have to be dealt with. Theoretically, the assets belong to all its members equally.

 

4. Conclusion

It can be seen from the above that every church is exposed to litigation or legal processes that may force a legal resolution upon a church in dispute. The obvious danger of this prospect is that disputes are then resolved by legal principles without any recourse to the scriptures. The authority of the leadership of a church is undermined as leaders will have to be subject to Court orders or directives of authorities.

To protect the independence and integrity of churches and their system of church government, it is essential that churches should not be subject to the jurisdiction of the Courts. In the context of Malaysia, if there is litigation involving a church it would mean in practical terms that the fate of the church would be decided by non-Christians (in most cases, Muslims). To minimise this danger, certain measures should be considered:

  1. Dispute Resolution Procedures should be drafted and incorporated into the constitutional documents of churches. This should state clearly that in the event of a dispute, certain internal mechanisms should be invoked or resorted to. Courts will honour such provisions and require a litigant to "exhaust all internal remedies" before coming to Court.
  2. Alternatively, arbitration clauses could also be inserted into constitutional documents of churches to require that disputes must be referred to arbitration. The identity of the arbitrator could even be described, eg. a specific committee or tribunal. Some churches may like the idea of an outside arbitrator. thus, arbitrators could be denominational committees serving churches of that denomination or an inter-denominational committee set up by NECF could offer its services to arbitrate in cases of specific church disputes.
  3. Leadership and succession issues should also be clearly described in constitutional documents of churches. This will prevent a challenge to a properly constituted leadership of a church. It will also prevent in the case of litigation the Court forcing its own nominated leadership upon a church.
  4. Property issues also must be clearly defined in the constitutional document of a church. A suggested approach is to treat all gifts as irrevocable and vesting in the corporate body (or what’s left of it). The identity of the church has then to be clearly defined as the group that subscribes to the articles of faith and accepts the duly constituted leadership of the church.

19 July 2003



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