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The organisation fears that allowing local authorities to ban walks to go ahead if previous events have been marred by public disorder, damage to property or disruption to the community, will invite attacks by rival groups.
It says ministers are acting outside their authority and that such a ban would breach their human rights.
The provision is expected to be included in a new police and public order bill currently going through the Scottish parliament.
Last month ministers were forced to concede defeat on proposals that would have allowed local communities to veto planned marches through their neighbourhoods because they faced being overruled by European laws guaranteeing the right to free assembly.
However, ministers are determined to press ahead with measures that would give local authorities greater freedom to ban marches or impose conditions. The notification period from organisers would be extended to 28 days from the current seven.
The new law will affect all 1,500 parades that take place in Scotland every year — most of which are organised by the Orange Order — as well as political demonstrations and local celebrations.
However, the Orange Order believes that any measure allowing councils to ban marches will fall foul of European law. It has warned ministers that if they continue with the proposals they will challenge the bill in the courts.
“We’ve not had any indication that ministers are going to take our points firmly on board,” said James MacLean, deputy grand master of the Grand Orange Lodge of Scotland. “We are seeking counsel’s opinion as to whether we should challenge the legislation itself or simply wait for an unfavourable decision by a council.
“It will be an expensive procedure but might very well be worth it — parades are a big part of our business and we have a lot to lose both politically and socially if they are curtailed. We have retained a QC to advise on mounting a legal challenge.”
Parade reforms were proposed following a review by Sir John Orr, former chief constable of Strathclyde police. It was commissioned by Jack McConnell, the first minister, to stamp out sectarianism. However, there are concerns that banning parades will be unworkable.
Some councillors believe that a new law will not give councils new powers to halt parades, even if local communities object.
The Orange Order is also mounting a nationwide campaign, including ordering members to lobby MSPs at their local surgeries, to ensure that the draft bill is balanced.
In the past four years the Orange Order has successfully taken a number of councils to court, including Angus, Aberdeen city and Perth and Kinross for attempting to ban marches.
“A major concern is that some people might try to disrupt marches to persuade the council to ban them,” said Ian Wilson, grand master of the Orange Lodge in Scotland. “It could encourage spoiling exercises to ferment trouble.”
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