BIJURALISM AND TAXATION:
INTERNATIONAL ASPECTS (continued)

3. Interpretation of Treaties and Domestic Law

In Canadian law, international conventions require legislation before they can have the force of law. Generally speaking, conventions are integrated into the legal framework through implementation legislation.[33] Parliament uses various means to implement international conventions. The best known include the textual incorporation of the provisions of a convention into the actual wording of the Act or into a schedule and the incorporation of the substance of the treaty obligations into the existing legislative corpus using terminology and concepts specific to the domestic law.[34]

Once Canada's international obligations have been implemented by the government through one technique or the other, these obligations can then be the subject of interpretation by various domestic courts just like any other law.[35] There are two theories regarding the method of interpretation that should be chosen.

According to the first theory, a reference to a domestic law concept should be interpreted according to the applicable domestic law, including the private law of the province of application. This approach is based on the rule that the principle of complementarity set out in section 8.1 of the Interpretation Act applies to any federal law unless otherwise provided by law.Since the obligations flowing from an international treaty have been incorporated into domestic law by means of a federal statute, it would then be necessary and even mandatory to interpret the provisions incorporating the international obligations in a way that ensures respect for the principle of complementarity with provincial law. If the provision is applied in Quebec, it follows that the suppletive law is the civil law of Quebec, whereas the common law is the suppletive law in the other provinces and territories.

Reference to provincial private law may lead to differing interpretations depending on the province of application and may result in the asymmetrical application of a federal statute. That situation was acknowledged by Mr. Justice Décary in St-Hilaire and is part of the Canadian legal landscape.[36] Is this acceptable in the case of international conventions?

It would be interesting to examine whether an interpretation based on provincial private law would be allowed in light of the context of the treaty. This question presupposes that differences might result from the application of some obligations in one legal system or in the other. It would then have to be asked whether such differences would be acceptable in the context of the treaty in question. It would also be interesting to consider whether there would be consequences because the State with which Canada had signed the agreement was a common law or a civil law country.

The answers to these questions may not be obvious in international law. However, it may be that nothing stands in the way of a Canadian court's interpreting enactments that contain Canada's international obligations in the same manner as ordinary legislation. The courts could interpret these provisions in a way that respects the bijural reality of the country, as section 8.1 of the Interpretation Act provides.

The other theory that can be proposed uses an approach that takes the context of the international convention into account.[37] Legislation is presumed to comply with Canada's international obligations.[38] Moreover, the Supreme Court has recently recognized that international obligations may come into play where the context allows it:

In interpreting legislation which has been enacted with a view towards implementing international obligations, as is the case here, it is reasonable for a tribunal to examine the domestic law in the context of the relevant agreement to clarify any uncertainty. Indeed where the text of the domestic law lends itself to it, one should also strive to expound an interpretation which is consonant with the relevant international obligations.

Second, and more specifically, it is reasonable to make reference to an international agreement at the very outset of the inquiry to determine if there is any ambiguity, even latent, in the domestic legislation. The Court of Appeal's suggestion that recourse to an international treaty is only available where the provision of the domestic legislation is ambiguous on its face is to be rejected. [39]

Can the same reasoning be applied to the principles of interpretation for international treaties, including the principles found in the Vienna Convention on the Law of Treaties?[40] Is there a rule of international law opposing reference to the private law of the provinces? The Supreme Court has ruled in favour of interpreting treaties in light of the international principles for the interpretation of treaties.[41] The question that must be considered is whether a conflict could arise between the principles of interpretation applicable to domestic legislation and those applicable to international conventions. First, tax laws have traditionally been interpreted literally and restrictively.[42] Today, this approach is no longer favoured as the courts have held that tax legislation should be interpreted like any other legislation.[43] The Supreme Court adopted the comments of Driedger in Stubart Investments Ltd. v. The Queen:

While not directing his observations exclusively to taxing statutes, the learned author of Construction of Statutes (2nd ed. 1983), at p. 87, E.A. Driedger, put the modern rule succinctly:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the act, and the intention of Parliament. [44]

On reading this statement it will be noted that the principle expressed by Driedger is similar to the rule for the interpretation of treaties in Article 31 of the Vienna Convention. The first paragraph of this provision states that “[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”[45] There are a few differences but the two statements overlap in terms of the essential elements that must be considered (ordinary meaning of the words, context of the words used and consideration of the object of the law or treaty).[46]

It must be noted, however, that the principle voiced by Driedger and recognized by the Supreme Court has been somewhat qualified in the interpretation of tax legislation, as noted by the Supreme Court in Canadav. Antosko.[47] Iacobucci J. indicated that it is not necessary to consider the other provisions of the Act and its purpose where “the words of the statute are clear and plain”.[48]

There is also a difference with respect to the role of preparatory work in the interpretation of legislation as compared with the interpretation of a treaty. Article 32 of the Vienna Convention permits reference to preparatory work in order to “confirm the meaning resulting from the application of article 31” of the Convention, whereas the common law does not generally allow reference to the legislative history except to show the objective of the legislation.[49]

This theory raises certain fundamental questions, however, in the context of Canadian bijuralism. What happens when an interpretation based on the private law of a province differs from the meaning of a term as understood in international law or as interpreted in a state that is a party to the same international convention as Canada? Are there rules to resolve an ambiguity of this kind?

Conclusion

In a somewhat summary fashion, two situations have been presented where international factors play a role in tax cases in the context of an analysis based on the principle of complementarity. The Supreme Court does not appear to have fully resolved the first situation, which involves the characterization of foreign entities. The tests still have to be worked out in order to establish which provincial law is to apply in the characterization of a foreign entity. The author is of the opinion that the principle of complementarity continues to apply and that the courts will have to clarify private international law rules for determining which provincial law is to apply.

With respect to the interpretation of terms not defined in international conventions, a clause referring to domestic law would appear to permit civil law and common law traditions to be respected in tax matters, but the question remains open with regard to situations where it is not possible to resort to such a provision. A number of questions remain such as the extent to which legislation incorporating Canada's international obligations is subject to the same rules of interpretation as domestic legislation and whether domestic courts may consider certain principles of international law.

Appendix

International law provides some rules for the interpretation of treaties. They are found, inter alia, in articles 31 to 33 of the Vienna Convention on the Law of Treaties:[50]

Article 31
General rule of interpretation

  1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
  2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

    1. any agreement relating to the treaty which was made between all the parties in connection with the conclusion of the treaty;

    2. any instrument which was made by one or more parties in connection with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

  3. There shall be taken into account, together with the context:

    1. any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

    2. any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

    3. any relevant rules of international law applicable in the relations between the parties.

  4. A special meaning shall be given to a term if it is established that the parties so intended.

Article 32
Supplementary means of interpretation

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

  1. leaves the meaning ambiguous or obscure; or

  2. leads to a result which is manifestly absurd or unreasonable.

Article 33
Interpretation of treaties authenticated in two or more languages

  1. When a treaty has been authenticated in two or more languages, the text is equally authoritative in each language, unless the treaty provides or the parties agree that, in case of divergence, a particular text shall prevail.
  2. A version of the treaty in a language other than one of those in which the text was authenticated shall be considered an authentic text only if the treaty so provides or the parties so agree.
  3. The terms of the treaty are presumed to have the same meaning in each authentic text.
  4. Except where a particular text prevails in accordance with paragraph 1, when a comparison of the authentic texts discloses a difference of meaning which the application of articles 31 and 32 does not remove, the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted.

Footnotes