Abstract
By creating unworkable rules based on misaligned object, content and purpose states fail to achieve their public policy goals by exceeding the limits of their remit and are responsible for the continued necessity for a spontaneous, non-state informal private legal order in cross border trade, the so-called bottom up approach to self-regulation. This in turn appears to prompt a need for state regulation in order to safeguard the very public policy goals. Only a reflection on the relationship between object and purpose can be a basis for successful modern treaty law in the area of international private commercial law. This chapter examines the role of object and purpose as recognized by Art. 31 of the 1969 Vienna Convention on the Law of Treaties, VCLT. The author looks at object and purpose separately and explains the meaning of each of these two terms with regard to selected international conventions regulating private commercial law including tax treaties. In combination with interpretation rules contained in the commercial law conventions themselves, an expanded meaning and use of object and purpose of a treaty can be discerned and used to form a reinforced comprehensive autonomous interpretation method. While the purpose of any convention is discernible by recourse to the texts and materials of a treaty, the object plays a decisive role in successful drafting, application and interpretation of a commercial law treaty. The author argues that it is exclusively the international character of the object that requires the creation of transnational substantive uniform law and other types of international commercial law.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
See Van Alstine (1998), p. 689.
- 2.
Along with Jonas and Saunders (2010), p. 569: “Scholars debate why states comply with their international law obligations despite the lack of strong enforcement mechanisms, and one of the critical factors recognized by multiple theories is whether the law is clear.’[…] Vague terms such as object and purpose erode the law’s capacity to guide state behavior.”
- 3.
- 4.
Convention for the Unification of Certain Rules Relating to International Carriage by Air, Signed at Warsaw on 12 October 1929—Warsaw Convention 1929 as amended by the Montreal Convention 1999. Text available from IATA at https://www.iata.org/policy/Documents/MC99_en.pdf.
- 5.
The Hague-Visby Rules—The Hague Rules as Amended by the Brussels Protocol 1968.
- 6.
UNIDROIT maintains a database on all its texts including the UNIDROIT Principles of Commercial contracts on its website, see Sect. 2.2 below.
- 7.
See Sect. 5 below.
- 8.
This technique is advocated by Van Alstine (1998).
- 9.
- 10.
Done at Vienna on 23 May 1969. Entered into force on 27 January 1980. United Nations, Treaty Series, vol. 1155, p. 331.
- 11.
See for further detail Sect. 4.2 below.
- 12.
Maintaining their database CLOUT.
- 13.
Maintaining their database Unilex.
- 14.
Such as the Pace University database or ‘lex mercatoria’ at the University of Oslo.
- 15.
Such as the International Chamber of Commerce (ICC) in Paris.
- 16.
- 17.
See Art. 31 (1) VCLT as quoted above. The expression “object and purpose” appears in seven further provisions of the VCLT. It has most often been discussed in case law of the ICJ in order to determine questions of the validity of reservations to treaties (as a compatibility test providing an alternative to the unanimity rule, Art. 19 (c) VCLT) and of states’ obligations under a treaty prior to its entry into force, Art. 18 VCLT. See Buffard and Zemanek (1998), Jonas and Saunders (2010) and Linderfalk (2003).
- 18.
Art. 31 (2) VCLT.
- 19.
Linderfalk (2003), p. 433.
- 20.
Buffard and Zemanek (1998), p. 318.
- 21.
- 22.
I.e. synonymous with objective, aim or goal as gleaned from the actual rules of a treaty. Linderfalk (2003), and Buffard and Zemanek (1998) explain in detail how the term object or the French objet has been understood in scholarship deriving meaning either from the normative content of the convention or likening the term encyclopedically to that of objective or aim (French but). Authors have not stepped out of the actual normative context, created by the convention, however, thereby creating a self referring technique, or circular argument, for the establishment of meaning under Art 31 VCLT and presupposing a similar meaning of both terms, also sometimes suggesting that they are interchangeable. This is criticized by Jonas and Saunders (2010), pp. 573–574, commenting on Art. 31 VCLT: “The text of a treaty must be interpreted in light of the treaty’s object and purpose, but the treaty’s object and purpose must be discovered through interpretation of the text itself. This circularity problem is discussed in detail [further down in their text].”
- 23.
So is the refugee according to Art. 2 Geneva Convention.
- 24.
The criterion of object and purpose was in fact initially developed from case law—see in more detail Buffard and Zemanek (1998), p. 316—in the ICJ’s Advisory Opinion Reservations to the Convention on the Prevention and Punishment of the Crime of Genocide, ICJ, Reports 1951, 15–30. See for a more recent case discussion concerning the 1948 Genocide Convention, Bosnia and Herzegovina v. Serbia and Montenegro (Bosnia v. Serbia), ICJ Reports 2007, Gibney (2007–2008): Gibney suggests applying the object and purpose (compatibility) test to the question of attribution and state responsibility where the actual acts of genocide are not carried out by the state itself: “If the Court had applied the same kind of “object and purpose” analysis to this issue (which it did not), it is next to impossible to imagine that it would have reached the result that it did. Thus, the question that the ICJ should have asked (but did not) is this: in what way is providing massive amounts of military, economic and political assistance to paramilitary forces with genocidal designs at all consistent with the object and purpose of the Genocide Convention?…”, Gibney (2007–2008), p. 146.
- 25.
See Sect. 5.3 below.
- 26.
- 27.
- 28.
As this is not possible under current state private international law.
- 29.
Regulation (EC) No 593/2008 of the European Parliament and the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I).
- 30.
Within the EU this is currently determined by Articles 3 and 4 Rome I Regulation.
- 31.
Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L 347, 11.12.2006, pp. 1–118.
- 32.
Parent Subsidiary Directive.
- 33.
Multilateral DTCs exist among Scandinavian countries and have been proposed by some European states to no avail so far, see Townsend (2001), p. 223.
- 34.
The Model gets updated on a regular basis. This chapter refers to the (penultimate) ninth version of it which is available from the OECD, “Model Tax Convention on Income and on Capital 2014 (Full Version)”, at http://www.oecd.org/ctp/treaties/model-tax-convention-on-income-and-on-capital-2015-full-version-9789264239081-en.htm. This publication also contains a list of all DTCs in force worldwide.
- 35.
United Nations Model Double Taxation Convention between Developed and Developing Countries, available at http://www.un.org/esa/ffd/wp-content/uploads/2014/09/DoubleTaxation.pdf.
- 36.
Identical text of footnote 1 to the preamble left blank of the UN and OECD Model.
- 37.
See Townsend (2001) for US judicial practice. A “shared understanding” seems to be generally acknowledged in US doctrine and judicial practice on the basis on a contractual conception of treaties. However, cases like United States v. Alvarez-Machain 504 U.S. 655 (1992) (see on this also Bederman 1994) and National Westminster Bank, PLC v. United States 144 Fed.Cl. 120 (1999) (NatWest) demonstrate how the contractual model has been taken to an extreme so that “a foreign nation’s wishes in the treaty interpretation process are to be utterly ignored when they conflict with the interpretation supported by the United States government” Bederman (1994), p. 1010. In both cases the partner state was deemed to have agreed to the respective US practice by having had knowledge of it at the time of contracting, i.e. the Ker doctrine concerning forcible abductions and extradition agreements in Alvarez and the Treas. Reg. sections 1.861-8 and 1.882-5 expressly mentioned in the Technical Explanations accompanying the DTC negotiating documents in NatWest, see Townsend (2001), p. 242. See Lang et al. (1998) for European judicial practice in the German speaking jurisdictions.
- 38.
It is accepted in case law of the ICJ and scholarship that the VCLT restated existing custom in international law. See for instance Arbitral Award of 31 July 1998 (Guinea-Bissau v Senegal), ICJ Reports 1001, 53; Genocide (Bosnia v Serbia), ICJ Reports 2007, 43, 109-10; Buffard and Zemanek (1998), p. 318; Crawford (2012), p. 380.
- 39.
Memec plc v Inland Revenue Commissioners (IRC) Simons Tax Cases Ch D [1996] STC, 1336 (Chancery Division); Memec plc v Inland Revenue Commissioners (IRC) CA [1998] STC, 754.
- 40.
Artikel 40 Verständigung—[direct conciliation between fiscal authorities initiated by taxpayer]
(1) Ist eine Person der Auffassung, daß Maßnahmen eines Vertragsstaats oder beider Vertragsstaaten für sie zu einer Besteuerung führen oder führen werden, die diesem Abkommen nicht entspricht, so kann sie unbeschadet der nach dem innerstaatlichen Recht dieser Staaten vorgesehenen Rechtsbehelfe ihren Fall der zuständigen Behörde des Vertragsstaats, in dem sie ansässig ist, oder, sofern ihr Fall von Artikel 38 Absatz 1 erfaßt wird, der zuständigen Behörde des Vertragsstaats unterbreiten, dessen Staatsangehöriger sie ist. [A person is entitled to refer his or her case to the authorities of his or her state of residence or nationality irrespective of national procedure if they think that measures taken by one or both contracting states will lead to a taxation that does not comply with this convention.]
(2) Hält die zuständige Behörde die Einwendung für begründet und ist sie selbst nicht in der Lage, eine befriedigende Lösung herbeizuführen, so wird sie sich bemühen, den Fall durch Verständigung mit der zuständigen Behörde des anderen Vertragsstaats so zu regeln, daß eine dem Abkommen nicht entsprechende Besteuerung vermieden wird. Die Verständigungsregelung ist ungeachtet der Fristen des innerstaatlichen Rechts der Vertragsstaaten durchzuführen. [If the competent authority considers the complaint justified… they can seek an understanding with… the other contracting state, in order to resolve the case in such a way that a taxation that does not comply with this convention is avoided]. [Note the ‘negative’ formulation.]
- 41.
UN Model, Introduction A. 2.
- 42.
1964 report of the OECD Fiscal Committee paras 164–165 quoted after UN Model, Introduction A. 3.
- 43.
- 44.
Vogel (1990).
- 45.
- 46.
The UK Guidance Notes are available at https://www.gov.uk/government/publications/rdr3-statutory-residence-test-srt.
- 47.
Such a guarantee would be what Tammelo described as justice in his 1969 article commenting on the drafting process of the VCLT, Tammelo (1969), see section 6 below, note 58.
- 48.
OECD (1999).
- 49.
Fothergill v Monarch Airlines [1981] AC 251; [1980] 2 All ER 696; [1980] 3 WLR 209; [1980] 2 Lloyd’s Rep 295.
- 50.
For details see Heidemann and Knebel (2010).
- 51.
Lang et al. (1998) found a very small number of reference to foreign court decisions by German courts in their analysis of cases arising under DTCs.
- 52.
States seek to apply their national law instead, using the interpretation rule in the Model and the respective DTCs based on that as explained above, and see Townsend (2001).
- 53.
Tammelo, writing at the time the VCLT was being drafted by the International Law Commission, ILC, observed: “…it has become obvious that the organization of the world into States as they exist today has become increasingly obsolescent. Contemporary States are not internally organized in such a way that their governments would be sufficiently capable of responsible and efficient action in the interest of their own citizens and for the sake of mankind.”, Tammelo (1969), p. 85.
- 54.
Another argument why the criterion ‘object and purpose’ may indeed be ill chosen, an opinion held by contemporary scholars and indeed drafters at the time, see Tammelo (1969), p. 81 who would have preferred ‘justice’ as a criterion to temper the ‘plain terms rule’ (see also note below), Buffard and Zemanek (1998), pp. 319–321 and Klabbers (2001), p. 306, who reports on the making of the ‘object and purpose’ criterion in Art. 18 VCLT in the context with the obligations of states during the time between signing, ratification and entry into force of a convention.
- 55.
CISG is still most often opted out of in international commercial contracts.
- 56.
The Annex—Explanatory Note by the UNCITRAL Secretariat on the United Nations Convention on International Bills of Exchange and International Promissory Notes says in its section A4.: “The United Nations Convention on International Bills of Exchange and International Promissory Notes is the result of a movement to establish a modern, self-contained international legal regime that would apply world-wide.”
- 57.
See previous note.
- 58.
Such a regime ought to be employed to deliver “justice” in international relations as Tammelo put it: “The phrase ‘international.., justice’ in Art. 1 (1) [of the UN Charter] can be understood to mean justice between men in their international concerns, that is, men in their international roles and affected by international events.” Tammelo (1969), p. 85.
- 59.
Proposal for a Regulation on a Common European Sales Law for the European Union COM(11)635.
- 60.
Doc. 3201 (S-VI). Declaration on the Establishment of a New International Economic Order, available at http://www.un-documents.net/s6r3201.htm.
- 61.
Tammelo (1969), p. 85.
References
Aust A (2013) Modern treaty law and practice, 3rd edn. Cambridge University Press, Cambridge, New York
Baasch-Andersen C (2005) The uniform international sales law and the global jurisconsultorium. J Law Commerce 24:159–179
Bederman DJ (1994) Revivalist canons and treaty interpretation. UCLA Law Rev 41(4):953–1034
Buffard I, Zemanek K (1998) Object and purpose of a treaty: an enigma. Austrian Rev Int Eur Law 3
Crawford J (2012) Brownlie’s principles of public international law, 8th edn. Oxford University Press, Oxford
Crnic-Grotic V (1997) Object and purpose of treaties in the Vienna Convention on the Law of Treaties. Asian Yearb Int Law 7:141–174
Ferrari F (1998) Das Verhältnis zwischen den Unidroit-Grundsätzen und den allgemeinen Grundsätzen internationaler Einheitsprivatrechtskonventionen. Juristenzeitung 1:9–17
Ferrari F (2007) The interaction between the United Nations Conventions on contracts for the international sale of goods and domestic remedies. Rabels Zeitschrift für ausländisches and internationales Privatrecht 71:53–71
Fredman S (2015) Foreign fads or fashions? The role of comparativism in human rights law. ICLQ 64(3):631–660
Gibney M (2007–2008) State responsibility and the object and purpose of the genocide convention. Int Stud J 4(2–3):141–150
Heidemann M (2017) Is internationalisation going too far? – Constitutional challenges of international data exchange programmes. EBLR 28(6):847–878
Heidemann M, Knebel A (2010) Double taxation treaties: the autonomous interpretation method in German and English Law; as demonstrated by the case of the silent partnership. Intertax 38(3):136–152
Jonas DS, Saunders TN (2010) The object and purpose of a treaty: three interpretive methods. Vanderbilt J Transnatl Law 43(3):565–610
Klabbers J (2001) How to defeat a treaty’s object and purpose pending entry into force: toward manifest intent. Vanderbilt J Transnatl Law 34(2):283–332
Klabbers J (2013) International law. Cambridge University Press, Cambridge
Lang M, Mössner JM et al (1998) Die Auslegung von Doppelbesteuerungsabkommen in der Rechtsprechung der Höchstgerichte Deutschlands, der Schweiz und Österreichs. Linde Verlag, Wien
Linderfalk U (2003) On the meaning of the object and purpose criterion, in the context of the Vienna Convention on the Law of Treaties, Article 19. Nordic J Int Law 72(4):429–448
OECD (1999) The application of the OECD model tax convention to partnerships. OECD Publications, Paris
OECD (2013) Action plan on base erosion and profit shifting. OECD Publishing, Paris
Roberts A (2011) Comparative international law? The role of national courts in creating and enforcing international law. ICLQ 60(1):57–92
Tammelo I (1969) Treaty interpretation and considerations of justice. Revue Belge de Droit International/Belg Rev Int Law 5(1):80–86
Townsend JA (2001) Tax treaty interpretation. Tax Lawyer 55(1):219–308
Van Alstine MP (1998) Dynamic treaty interpretation. Univ Pa Law Rev 146(3):687–794
Vogel K (1990) World wide vs source taxation of income - a review and reevaluation of arguments. In: McLure et al (eds) Influence of tax differential on international competitiveness. Proceedings of the VIIIth Munich Symposium on International Taxation. Kluwer, Deventer, Boston, pp 117 et seq
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer International Publishing AG, part of Springer Nature
About this chapter
Cite this chapter
Heidemann, M. (2018). Object and Purpose as Interpretation Tool in International Commercial Law Conventions: How to Make the ‘Top Down Approach’ Work. In: Heidemann, M., Lee, J. (eds) The Future of the Commercial Contract in Scholarship and Law Reform. Springer, Cham. https://doi.org/10.1007/978-3-319-95969-6_16
Download citation
DOI: https://doi.org/10.1007/978-3-319-95969-6_16
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-95968-9
Online ISBN: 978-3-319-95969-6
eBook Packages: Law and CriminologyLaw and Criminology (R0)