Legal and Governance Issues
3.2. Governance - Management interplay
3.3. Negotiating and developing the governance and scope
3.4. The basic elements of a legal structure
3.5. The choice between alternative legal structures
3.6. The European Research Infrastructure Consortium-ERIC
3.7. Commonalities and differences between single-site and distributed RIs
3.8. Definition and role of partners, regional partners, and regional RIs
3.9. RAMIRI Training Slides
In Chapter 1 a number of “rules of the game” have been referred to, which define what a RI is and what it must be capable of doing. The implementation of these aspects and capabilities is based on the appropriate agreement between the parties involved, to be transformed into a viable contract as the base of an institutional arrangement. This arrangement must ensure the correct (and lasting) relationship between all stakeholders, which may be (approximately) divided into shareholders and funders, managers, users, third parties.
This is similar to setting-up other enterprises (firms, expeditions, projects etc.), which need to put together resources belonging to different individuals or legal entities, to achieve a common scope. This similarity does not mean that it is a simple matter, because most of the existing expertise is connected to economic enterprises, while RIs are not. Furthermore the setting up and running of an enterprise is not always successful, depending on the type of parties involved and their capability and their will to reach a consensus. This has given rise to a vast and ever increasing literature and to a very large professional layer of people involved both in their setting-up and in correcting mistakes made in setting-up (lawyers, notaries, accountants, …if not tribunals).
This chapter will deal with the setting up of the legal frame for an RI as agreed by those stakeholders who are directly involved in its construction and operation. This frame should aim at having the RI operating correctly during its lifetime, but also provide for its end or transformation after its useful lifetime.
This chapter will review examples of different choices made for a number of research infrastructures in operation (with special emphasis for the European context). In addition, special attention will be given to Distributed Research Infrastructures (DRIs).
An important aspect to obtain a satisfactory outcome of the efforts and resources invested in an RI is to distinguish, from the beginning and in all phases, the (who develops the strategy and defines the rules, commits the resources needed to reach the scope and goals, and then evaluates the outcomes) and the (who is given the executive power and bears the responsibility to obtain the results).
It is important not to confuse the role of the executive and the governing body, most organisations generally need to have cross representation of the executive on the governing body. These tend to be ex officio positions and so the CEO, COO or equivalent, usually do not have the right to vote if voting is necessary on decision taking.
While this division is (normally) very clear in a well-functioning large industrial firm (where the governance is the Assembly of the shareholders, delegating the executive powers to a Board of Directors), this distinction between the strategy and the execution is not always clear in the academic environment from which the RIs scientific stakeholders come.
In an academic environment most institutional structures are governed by cooption based on the scientific quality as perceived by peers. Not always scientific quality and managerial capability go together, and, as soon as a more structured institutional frame is needed, there may be the need to follow different rules and there may be a strong reaction against what is felt as “bureaucratically”.
The fact that an RI requires investments and resources beyond the typical functioning of an academic environment, and the fact that it must be oriented to serve external users, requires a structure (i.e. a dialectic balance between an Assembly (strategic) and a Board (executive)) to be set up ensuring the service to users and the correct use of the resources to this end, while applying the best practices to ensure scientific quality.
In setting this up, a tension between scientists and administrators needs to be managed, where non-academic players (governments, other funders, industries, etc.), if faced with the “obvious naivety” of academics (in economic matters) may want to set-up a control system down to the micromanagement level, mixing governance and management, with disastrous results.
While, in an industry, the interplay and balance between governance and management develops between people of similar cultures, who have a deep understanding of the core business of an economic enterprise (i.e. focus on activities capable to repay the investments) an RI may have a strong unbalance between the culture of administrators in the Assembly and of scientists in the executive Board.
The success is not measured by net income but by knowledge production and by its impact on public knowledge (non economic, and mainly without income). The full capability to understand this may lack in the Assembly, and the Board could be suspected of conflict of interest. The development of the correct strategy to attract scientists and give them the instruments to best produce high quality research needs external advice, i.e. the setting up of independent expert advice, bodies capable to perform international-level advice and evaluation both on the quality of the services and on the quality of the users allowed to access the RI.
Scientific and Technical Advisory Bodies of the highest quality and independence are the real assets of a successful RI, and have also the important function to balance the intrinsic tensions outlined above.
The tension between the need to ensure that the “owners” (funders) are satisfied that resources are properly used, and that the managers are given the freedom to best reach the results, needs to be clearly understood from the beginning, in the negotiating phase of an RI, in which checks and balances need to be discussed and agreed involving both the scientific and the administrative cultures, and, above all, where common understanding of the scope and mutual trust must be built among all parties involved.
There is some point in the development of a RI where it is recognized that the integrity of the organization requires a level of governance so that the people within can be held to account and scrutiny both in terms of internal and external activity. Before the exact nature and structure of a governing body is described, it is pertinent to rehearse the reasons for this part of the governance. It becomes axiomatic that the question “Who guards the guards?” has to be asked, and the answer often has to be through a governing body that can hold the management (or executive) of the RI to account and to assure funders, the public and staff that decisions that are being taken have been examined and approved.
To many people within an RI their interest is driven by research and the purpose of governance is often obscure, or seen as an unnecessary tier of interference with the day to day activity of the RI. It is hoped that the descriptions and reasoning outlined here help to show why a governing body is essential for many RI configurations.
It is the interplay and relationship between the executive and the governing body that defines good governance, this relationship needs to be clearly defined. Often is not, this can lead to drift in the behavior of the organisation. Familiarity between a governing body and the executive can lead to overlap that eventually leads to a lack of recognition of who is the executive, i.e. those employed to carry out the activities of the organization and the governing body that should scrutinize the executive and give recommendations, but not do the work of the executive.
With the best possible clarity, the governing body exists to opine on the proposals made by the executive, and give their approval or otherwise. It is not for the governing body to rewrite or do the work of the executive. Maintaining this discipline is often difficult but it is worthwhile. It also requires the issues taken to the governing body to be carefully thought through. In many cases the representatives of a governing body will hold or will have held executive positions in other organisation, members have to have clarity on their role which often requires induction and training as well as clearly defined terms of reference.
The level of governance needs to be addressed and often reflects the maturation of an organization. “Overgovernance” is often a subjective perception depending on where an individual sits within an organization. The initial formation of an RI can benefit from a governance structure that can scrutinize the executive from the start to make sure that early actions are sound. The maturation of the RI can lead to the need for a council as a governing body often containing representatives from external bodies that support the RI usually financially. The maturation of the RI can therefore lead to an explosion in work for the governing body, overburdening the governing body can lead to lack of scrutiny and poor or ill form decision making, the governing body may develop in tandem with scientific advisory bodies that can give expert opinion to the executive without making or approving decisions.
The governing board or council (the Assembly) might often be too big to be manageable and able to meet often enough: in these cases it can work through supporting committee structures that share the burden of specialist scrutiny and allow the main governing body to have a better informed oversight of the main activities of the RI.
The setting-up of European RIs requires reaching a lasting and stable agreement between people from different countries and professional backgrounds who can have very different perspectives on the same issues. This agreement must be formally written to endure the changes (both predictable and unpredictable) in people, governments and in institutional perspectives. The cultural aspect cannot be over-emphasized and can be even more demanding in setting-up a global RI, dealing with cultures which may even impede to express openly agreement or disagreement. Read more in OECD documents area and in the EC document on Cost Control of global RIs .
For an EU level RI, if this aims at the ERIC legal form (introduced later in this chapter) or in any case needs national support, the people involved in negotiations must include government officers, institutional representatives and interested scientists. While it is likely that scientists and research institutions of different EU countries have a common background and a common motivation, this is not always the case for government administrators.
The legal and juridical frame in European countries varies from a “northern” approach based on giving full responsibility to the individuals and institutions involved (but with strong a posteriori evaluation and, if needed, retribution) to a “southern” approach trying “a priori” to avoid any possible mistake and misdeed by imposing very detailed and rigid rules (but much less capable of a-posteriori evaluation, and a tendency to forgive retribution). While it is difficult to refer to clear documents exposing tensions arising from this potential conflict, traces of it can be found in the complexities of some draft statutes and voting procedures proposed so far (draft statutes of the “Preparatory phase” projects funded under FP7).
The cooperation of partners, countries or their designated organisations, to legally establish and finance a research infrastructure is reflected in its governance. Which governing body will represent the partners in order to make all major decisions and funding is a key decision. Negotiating the establishment of new RIs is mainly dealing with governance. How much votes will each partner have? Is this one vote per country or related to its financial contribution or the number of users from this country? Who is representing the country’s interests: a Ministry, Research Council or Research Organization?
Practice shows that trust amongst partners is best served with one vote per country. Any other choice has negative side effects. Allowing more voting rights to large funders (often larger countries) may eventually result in lower or disappearing interest from other countries to participate. A relation of decision power with the amount of national users of the research infrastructure has a similar effect as this is clearly a negative incentive to promote excellence and access.
Another issue with respect to the legal basis of governance is its position and role relative to at one side the national authorities they represent and at the other side the executive management of the research infrastructure.
When devising a governance structure, and in the early stages of their consultations, the partners should decide about the balance of power and authority that they want to attribute to themselves individually, to the governing board (which will represent them collectively), and to the executive management. There is an understandable desire among the partners to maintain control of the project, since they are accountable at the national level for the efficient spending of public funds. On international projects, they may face extra scrutiny (for example, from parliaments), especially in countries that have a tradition of strong, predominantly national programmes. But the executive management will need the authority and resources to make timely decisions as well, without the necessity of always seeking the explicit approval of the partners.
There are solutions to act with the right balance, for example by introducing an executive board of the governing body that will interact more closely with the management without engaging the full governing body, and increasing the visibility and the role of independent Scientific and Technical Advisory Bodies. Another helpful type of body can be the Budget (and/or) Finance Committee which on one side advises the management in their operations, and on the other side ensures the Assembly that the technical/financial aspects are correctly developed.
Other issues emerge during negotiations: a typical example is the process to agree on the country to host the site to build the research infrastructure. It is wise to agree in advance about the decision process and the decision criteria (e.g. see ESFRI report on Site Issues). Is this a pure scientific choice, a political choice, or the result of who pays most?
Another example that requires interaction between the communities involved is how to assign contracts for constructing the research infrastructure. The (national) scientific communities will have their ideas on the construction specifications, the construction process and supervision. This is not necessarily the opinion of national authorities who also may see industrial (economic) opportunities.
In general there is a danger of a disconnection and the scientific community losing interest and patience when negotiations between national authorities take too much time. At each stage of the life cycle of a research infrastructure attention should be paid to find appropriate ways to involve the different interests and associated communities.
In large scale RIs planned as such from the start a governance and a duality with management may be an element of the initial or very early concept embedded into the organisation, while, in other cases, when an organisation grows and evolves into a RI, this may not appear as necessary in the first instance and it may take some exposure to risk before a governance structure is accepted as being an essential element. Governance therefore provides a reflection of a compromise between conflicting interests of the funders, the community of users and the scientific community as a whole, managers/administrators.
The choice of the legal framework for a RI is always a specific issue. The best approach is to try, before starting to discuss the legal form, to have a clear vision of what will be the functions, the mission, and the scope and then define the governance
A legal structure for an RI is based on a statute which must contain the following elements:
- The frame of agreement (typically in a foreword)
- The scope
- The governance and management (plus expert advice)
- The resources (financial, in kind, human) and commitments
- The controls, repairs, and folding-up when needed (including, if needed, Budget/Finance committee)
In point c. and e. the need of the expert advice (on science, techniques and administration) should be underlined, following the discussions in the previous paragraphs.
Research infrastructures can also be operated by an existing organisation, but, if this organization has a much wider or different mission, it is wise to consider establishing a separate and appropriate legal basis. RIs have a dedicated task to provide services with open access to external scientists on the basis of one or more large, sophisticated and expensive facilities, and appropriately trained and dedicated staff. In most cases, different parties (even countries) are co-financing the infrastructure. All this suggests that it makes much sense to choose a legal entity that will allow the independent operation of the facilities, the users access and support with the required type of management, access and evaluation rules.
Developing the legal structure of a RI is essentially organizing in a nice and wise way the powers of the interests involved. Already at the early stages of conception of a new RI this is already a crucial consideration. The plan for the RI is the "baby" of the scientists involved, and they – understandably – want to control the further developments.
At a certain stage (and definitely so for a pan-EU RI) it may become inevitable to involve other powers; funding bodies and ministries who are asked to commit to long-term funding. This might be easier for nationally based infrastructures, but it is quite different for international initiatives. “Going international” is required when costs are high, when expertise from different countries must be involved, and when the infrastructure should operate with international access. It will imply the involvement of national authorities to deal with legal and financial options, but also the involvement of their interests that are not necessarily similar to those of the scientific communities.
Although abbey libraries were already set up and functioning very much as RIs visited by scholars (mainly clerics) from all over Europe in medieval times, the research infrastructures as we see these today are a rather recent innovation. In our modern times an early example is the Stazione Zoologica Anton Dohrn in Naples founded in 1872. The German scientist Anton Dohrn had the vision to promote basic research by hosting visiting scientists that needed marine organisms for their studies. He had troubles to convince the authorities of his vision to establish a special institute and independent legal entity and could finally realize his dream in Italy.
It requires determination (and typically an individual who drives the process) to get stakeholders together, get their commitment, and then to agree on an appropriate legal structure for a research infrastructure. National research infrastructures are in this sense easier as their structure can be chosen from known domestic, public or private, models. A foundation, German Stiftung or Dutch/Flemish stichting, or other non-profit legal forms are well known examples in various countries.
Companies are often used to set up RIs when they can be adapted to non-economic public-private needs, because these are better integrated into the legal framework of the country where the research infrastructure is located (e.g. French Société civile, UK Limited liability Company (Ltd), German Gesellschaft mit beschränkter Haftung (GmbH)). Some national legislations do not envisage a “not for profit” Company (for example, in Italy) and adopting this form may result in a difficult relationships with the shareholders and in complex accounting systems (e.g. how to account for amortization or VAT) to fit a “not for profit” into an “economic” legal form.
We also see agreements between countries establishing an internationally operating RI on the basis of the national law of one of the parties. Negotiations for such agreements can take a long time as countries may dislike funding a legal entity that is controlled by national law of another country, and, even more, dislike the idea of long term financial commitments subjected to taxation and generating returns in other Countries.
One alternative is to establish an International Organisation ruled by an international treaty. From the perspective of the research infrastructure this is ideal, as for the successful examples of CERN, ESO, ESA and EMBL. This alternative in Europe was valid before the start of the EU and is now difficult to replicate, because the perspective of governments in Europe is not, anymore, so favorable. Negotiating international treaties is not simple, requiring also the approval of each parliament, and governments do not like the very independent position of International Organisations, and the relatively rigid and incompressible budgets ensured by specific treaties.
The situation leading to these cases has been unique, connected to the strong feeling for bringing people together and to the economic growth which followed the end of the 2nd World War. Already, in the 1970’s, the effort to set up the ESRF (finally in a national legal form) took over 10 years of preparation and several years of negotiations. Read more in “Establishing Large International Research Infrastructures: Issues and Options” (OECD – Global Science Forum), December 2010“.
The need and ambition for developing new research infrastructures in Europe, in particular to implement the ESFRI Roadmaps, triggered discussions about an appropriate legal framework to establish and operate pan-European infrastructures. A new legal instrument was needed to have the following features:
- provide a legal personality which is recognised in all Member States
- reflect the spirit of a truly European venture
- be flexible to adapt to the requirements of the different specific infrastructures
- be easy to use and speed the process of setting up the infrastructures
- provide some of those privileges and exemptions which are allowed at a national level for non-profit research
- allow the attraction and flexible management of human resources.
Rather quickly the Commission succeeded in reaching the approval of a proposal on a EC Council Regulation (No 723/2009) providing a common legal frame for European Research Infrastructures Consortium (ERIC).
The EC Council Regulation on ERIC was published on 25 June 2009. The procedure and several useful steps are detailed in a Practical Guidelines published by the EC. ERIC can be proposed by Member States, and participated by Associated Countries and International Organizations (Parties), fulfilling almost all of the criteria listed above, except on human resources which, differently from the international bodies set-up by treaty, will be subjected to the law of the hosting state (see also Practical Guidelines, page 27).
An important advantage is that such a Regulation (as all EC Regulations) would be applicable with immediate effect in every EU Member State. The ERIC is a defined, but also flexible, legal form in which the perspective Parties can introduce the specific aspects of mission, type of activities, governance and financial, basic rules etc.
The procedure, once the agreement on the scope and resources has been reached involving the Governmental level, is rather simple: the proposal of a Statute as agreed by the Parties is submitted (by one of the Parties, typically the one chosen as the host of the statutory seat) to the EC, in a first step in which its conformity with the EU rules is verified, and the scientific/technical content is evaluated.
If this “step 1 verification” is favorable and if the participating Countries accept to apply the tax exemptions, defining their limits, then a relatively simple second step is needed, consisting in the written application by the founding members to the EC. The ERIC is then created upon Commission Decision and published in the Official Journal of the European Union (the first ERIC established in March 2011 is the SHARE-ERIC).
An ERIC research infrastructure under this regulation must respect the following conditions:
- be set-up by at least three Member States (MS), its statutory seat must be in a MS. The ERIC is open to the participation of Associate and third Countries
- carry out European research activities
- represent added value in the scientific and technological fields at the European and international level
- be accessible to researchers from Member States and countries associated to the Community Research and Development Framework Programme
- promote the mobility of researchers and the exchange of knowledge within the European Research Area (ERA)
- participate in the dissemination and optimisation of the results of research activities.
While most of the published expertise on legal and governance issues available until now relates to single site and large RIs, the largest number of RIs now being considered are “distributed”, as defined by ESFRI.
Long term expertise exists also for distributed RIs, only it has not been, so far, explicitly formalized in official or in “grey literature” studies, and this requires a deeper analysis in the present HB.
The early example of distributed RIs is given by the Libraries-Abbeys set up all over Europe and governed by the Benedictine order from the Middle Ages onwards. They had a clear distinction and interplay between local management and European-wide governance and oversight, which proved to be a very effective and successful model, with many of the features needed for a modern distributed RI. In modern times, the EMBL and ESO have developed this concept in different ways, while most of the ESFRI roadmap and some of the new “bottom-up” proposed RIs (as, e.g. CERIC) are distributed RIs, several of which are building the concept from earlier EU funded networks.
While most of the “single site” RIs have been or are being set-up starting from a “green field” (or a smaller local lab, easily reabsorbed into the larger enterprise), most of the DRIs emerge from the integration and upgrade of existing capabilities owned and managed by different institutions (Partner Facilities). Only few cases (e.g. the abbeys and the astronomical observatories of ESO) were planned and conceived from scratch as connected to a network, others start from single site but then evolved into a more distributed entity but keeping a strong reference centre (e.g. the EMBL and its outstations, or CERN and its partner laboratories, the two cases being quite different in their structural integration). One case of distributed RI planned from the beginning is ELI.
As far as the statistics of the ESFRI proposal shows, most of the DRIs which are being set up will be coming from a stronger integration of single site National or Regional Facilities that were already collaborating, in some cases strengthening complementarities between different types (e.g. Euro-BioImaging, PRACE, EMBRC) in others bringing together different territorial data (e.g. ESS, BBMRI).
An important aspect of distributed RIs is their larger “geographical areas of impact”, by the increased outreach which can be developed by their “Partner Facilities”. The interplay between Partners and RIs (or DRIs) calls to attention other two important concepts developed by ESFRI, and the Regional Research Infrastructures. These concepts are very important in the context of outreaching regions and countries where there are less RIs, and for a stronger investment of EU Structural Funding in research in those areas.
The Partners of distributed RIs, therefore, need to define how strong and extensive is the integration into single governance, and whether the statutory seat is a central facility or only a primus inter pares. This also opens the issue of what is conferred (in kind? or in true ownership?) to the DRI and how (money contributions?, transfer of ownership?, only granted access?, who is the employer of personnel?, central or distributed administration?, etc.), this, in turn requires each Partner to define some ownership borders and related governance and management of what is included into the distributed RIs resources.
If we look at commonalities we see that the “Assembly” and the “Advisory and Control systems” are (need to be) very similar in RIs and in DRIs, to ensure a common scope and the quality of service and appropriateness in the use of the resources. Most of the issues touched on about Governance vs Management, Negotiating, and Legal Structures are also very similar.
The differences can be….different between infrastructures which can be strongly different within both RIs and DRIs.
For example, both RIs and DRIs may have only or mainly “virtual” access and/or content (networks of High Performance Computing, or data banks) while others have mainly or only physical access and hardware content (e.g. EMBL or EMBRC). In the first case the investments and management does not need to cover a strong component of physical support to individual users, but needs a strong capability in ICT-based technologies, while, in the second case, the physical presence of users requires to take into account items as physical safety, office and laboratory space, hospitality, travel and visa support, etc.. In some RIs and DRIs (in particular in the BMS, Biomedical Sciences but also in some ENV) there may be strong issues of confidentiality and/or other rules in the access to data.
All the above differences need to be addressed in negotiating and setting up the legal as well as in the governance and management frames of the RI (and DRI).
A research infrastructure with multiple sites will often originate from legally separated facilities, each one with a different legal basis. Such a decision will be based on the conclusion that the infrastructure operations and services will provide real added value when organised at the European level. It is important that such a process starts by carefully considering which functions of the separate facilities have to be integrated in a united infrastructure. It will then become possible to conclude
- what are the implications for the separate facilities,
- whether a legal entity or a consortium agreement suits best for the common organisation,
- which legal form is the best for the new entity,
- what are the implications with respect to assets, budgets and personnel.
Research infrastructures, and especially e-infrastructures, often depend on the operations of other organisations, which are not (and cannot) be part of the infrastructure’s legal entity. Examples of such operations of external resources are data generation or data processing from independent distributed facilities.