Thursday, February 13, 2020
Michael Lang (Head of the Institute for Austrian and International Tax Law, WU Vienna University of Economics and Business) presents Can Law Regulate its Own Interpretation? The Example of Double Taxation Conventions at the University of British Columbia Peter A. Allard School of Law as part of its Tax Law and Policy Workshop Speaker Series hosted by Wei Cui:
One cannot overestimate the importance of interpretation provisions. They are an attempt to put limits to the powers of judges in interpretation. In doing so, they emphasise individual aspects that need to be taken into account for interpretation. However, they by no means conclusively regulate the approach to be taken in interpretation. After all, this would have been impossible: Thinking processes cannot be subjected to a detailed regulation.
Against this background, one must also relativize the interpretation rules found in the VCLT. In the case of double taxation conventions, it is already questionable as to whether a legal basis exists for regarding them as binding rules at all. In addition, they are limited to highlighting individual aspects of the interpretation of international law treaties. Moreover, they can by all means be adequately used for a given subject. Accordingly, subsequent agreements between the Contracting Parties and a subsequent practice are only of minor significance—if any—in the case of tax law treaties.
The interpretation rules of the VCLT, however, are superseded by the DTC provisions modelled on Article 3 para. 2 OECD MC. Ultimately, this provision underlines the need for an interpretation from the context of the convention. Only an interpretation of the DTC provisions that is detached from the respective national legal systems of the Contracting States will allow for an interpretation of these rules which distributes the taxation rights between the two states without any overlapping, thus avoiding double taxation. Such an interpretation can also take into account all other arguments that are otherwise significant in determining the meaning of a provision.