© 2025 by Michael Firth KC, Gray's Inn Tax Chambers
Contact: michael.firth@taxbar.com
International treaties (general)
INCORPORATION INTO DOMESTIC LAW
No automatic effect
- Treaties only have effect to the extent that they are incorporated
[6] Double taxation arrangements agreed with other territories are not straightforwardly incorporated into domestic law. As explained by Lord Hoffmann in NEC Semi-Conductors Ltd & other test claimants v Inland Revenue Commissioners [2007] UKHL 25; [2007] STC 1265 at [8]:
“… An international treaty does not give rise to any rights in English domestic law unless incorporated by legislation. The EC Treaty is so incorporated, in its entirety, by the European Communities Act 1972. But with DTCs the position is more complicated. Section 788 of the 1988 Act provides that Her Majesty may by order in council declare that arrangements made by a DTC shall ‘have effect’. But the result is not to make the whole DTC part of English law. By s788(3) the arrangements shall have effect ‘notwithstanding anything in any enactment’ – ‘in relation to income tax or corporation tax in so far as they provide (a) for relief from income tax, or from corporation tax in respect of income or chargeable gains; or (b) for charging the income arising from sources, or chargeable gains accruing on the disposal of assets, in the United Kingdom to persons not resident in the United Kingdom; or…(d) for conferring on persons not resident in the United Kingdom the right to a tax credit under section 231 in respect of qualifying distributions made to them by companies which are so resident.’” (HMRC v. Aozora GMAC Investments Ltd [2022] UKUT 258 (TCC), Falk J and Judge Jennifer Dean)
Implementing legislation
- Construction of legislation relating to implementation not directly informed by treaty
"The interpretation of section 793A(3) cannot be directly informed by specific treaty provisions, in particular provisions agreed after enactment of the statute. Further, as explained in R (PRCBC) v Home Secretary, the external aids to which we were referred, although to some extent helpful in adding background and context, must have a secondary role. Adopting the purposive approach described in Hurstwood, we must identify the type of treaty provisions that section 793A(3) is intended to catch and assess whether Article 23 falls within that scope.” (HMRC v. Aozora GMAC Investments Ltd [2022] UKUT 258 (TCC), Falk J and Judge Jennifer Dean)
- Requirement for "express provision [in the treaty] to the effect that" does not include provisions that merely have that effect/consequence
"[39] Section 793A(3) requires an “express provision to the effect that relief by way of credit shall not be given”. In contrast, we note that Article 23 does not expressly set out the circumstances in which credit relief is no available. t available, but rather it sets out the cases or circumstances in which the benefits of the Convention are.
[40] We consider that HMRC’s interpretation puts disproportionate weight on the word “effect”. The entire subsection must be construed in its wider context. In our view, there is no justification to stress one part of the subsection to the exclusion of the rest. HMRC’s approach appears to accord no weight to the word “express”, to the reference to “relief by way of credit”, to the use of the negative (credit shall “not” be given) or to the fact that the provision in question must apply “in cases or circumstances specified or described in the arrangements”. In our view, HMRC’s interpretation also has the effect of treating “to the effect that” as equating to “which has the effect that” (or has the consequence that), which is not the wording that Parliament chose to employ.
[41] We consider that a more natural interpretation of the words “… to the effect that relief by way of credit shall not be given…”, particularly in the context of the prior reference to an “express” provision, is that section 793A(3) is intended to catch provisions in a treaty which state, in terms, that credit relief shall not be given, or which contain other wording that conveys the same message, even if the text used does not precisely correspond to the words in section 793A(3). That gives a natural meaning to each of the words used.
...
[45] Further, the wording “cases or circumstances specified or described” most naturally refer to criteria set out in a treaty from which it is possible for a taxpayer to discern whether they fall within them or not, rather than to something that may depend on the exercise of discretion by another Contracting State. HMRC’s interpretation has the effect on these facts that relief is denied under domestic law by a decision taken by the counterparty Contracting State in its discretion, not subject to judicial scrutiny in this jurisdiction or (potentially) in the other State. In our view, the Tribunal should be slow to adopt such an interpretation." (HMRC v. Aozora GMAC Investments Ltd [2022] UKUT 258 (TCC), Falk J and Judge Jennifer Dean)
- Implied repeal does not apply to double tax treaties
"[20] The Treaty was originally entered into on 8 September 1978, and has since been amended. It has effect for the purposes of relieving double taxation by virtue of The Double Taxation Relief (Taxes on Income) (Canada) Order 1980 (SI 1980/709), made by an Order in Council pursuant to what is now Chapter 1 of Part 2 of TIOPA. It is uncontroversial that, if relief is available, then that will override the domestic charging provisions, even if those provisions are enacted later than the relevant Order in Council: s.6 TIOPA (previously s.788 of the Income and Corporation Taxes Act 1988). The constitutional reason for this is articulated in the illuminating judgment of Singh LJ in Irish Bank Resolution Corporation Ltd v HMRC [2020] EWCA Civ 1128, [2020] STC 1946 ("Irish Bank"), where he explained at [55]-[57] that the doctrine of implied repeal does not operate in the context of double tax treaties." (Royal Bank of Canada v. HMRC [2023] EWCA Civ 695, Falk, Asplin, Nugee LJJJ)
INTERPRETATION PRINCIPLES
Vienna Convention approach not exhaustive if other rules of international law relevant
"[60] [The taxpayer] submitted before us that the Upper Tribunal was wrong to consider that the Vienna Convention is exhaustive as to what can be taken into account in the interpretation of treaties. While it may be true that the Vienna Convention is not exhaustive (and [HMRC] did not suggest that it is), what still has to be shown is that there is some other rule of international law which permits something else to be taken into account. Rules of international law have two main sources: they may be found in either treaty law or in customary international law. There is nothing in treaty law other than what is set out in the Vienna Convention to which [the taxpayer] was able to point. Nor was he able to point to any rule of customary international law to support his submission." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Singh LJ)
Summary of principles
[16] It was common ground that a convenient summary of these principles and the way in which they have been applied by the English courts is to be found in the judgment of Mummery J (as he then was) in Inland Revenue Commissioners v Commerzbank AG [1990] STC 285 at page 297 where the judge said:
"Before I examine the contrary submissions of the Crown, it is necessary to refer briefly to the approach to the interpretation of provisions, such as art XV, which have been agreed between sovereign states in a convention or treaty and have subsequently been given the force of law in the United Kingdom by reason of the implementing provisions of primary or secondary legislation. The parties are agreed that the correct approach is that laid down by the House of Lords in Fothergill v Monarch Airlines Ltd [1981] AC 251. That case gave rise to problems of comparison with a foreign language text (that is, the French text of the Warsaw Convention) which are not present in these appeals. The House of Lords had to compare the English text and the French text because of a provision in the convention that the French text should prevail if there was any inconsistency between it and the text in English. Putting that special feature on one side, that decision makes clear the approach which should be adopted by the court..." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
- (1) Consider clear meaning and whether it is consistent with purpose
(1) It is necessary to look first for a clear meaning of the words used in the relevant article of the convention, bearing in mind that 'consideration of the purpose of an enactment is always a legitimate part of the process of interpretation': per Lord Wilberforce (at 272) and Lord Scarman (at 294). A strictly literal approach to interpretation is not appropriate in construing legislation which gives effect to or incorporates an international treaty: per Lord Fraser (at 285) and Lord Scarman (at 290). A literal interpretation may be obviously inconsistent with the purposes of the particular article or of the treaty as a whole. If the provisions of a particular article are ambiguous, it may be possible to resolve that ambiguity by giving a purposive construction to the convention looking at it as a whole by reference to its language [1990] STC 285 at 298 as set out in the relevant United Kingdom legislative instrument: per Lord Diplock (at 279)." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
- (2) Do not interpret as if UK legislation, apply broad principles of general acceptation
"[16] (2) The process of interpretation should take account of the fact that—
'The language of an international convention has not been chosen by an English parliamentary draftsman. It is neither couched in the conventional English legislative idiom nor designed to be construed exclusively by English judges. It is addressed to a much wider and more varied judicial audience than is an Act of Parliament which deals with purely domestic law. It should be interpreted, as Lord Wilberforce put it in James Buchanan & Co. Ltd v. Babco Forwarding & Shipping (UK) Limited [1978] AC 141 at 152], "unconstrained by technical rules of English law, or by English legal precedent, but on broad principles of general acceptation': per Lord Diplock (at 281–282) and Lord Scarman (at 293)." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
- (3) Interpret purposively
"[16] (3) Among those principles is the general principle of international law, now embodied in art 31(1) of the Vienna Convention on the Law of Treaties, that 'a treaty should be interpreted in good faith and 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'. A similar principle is expressed in slightly different terms in McNair's The Law of Treaties (1961) p 365, where it is stated that the task of applying or construing or interpreting a treaty is 'the duty of giving effect to the expressed intention of the parties, that is, their intention as expressed in the words used by them in the light of the surrounding circumstances'. It is also stated in that work (p 366) that references to the primary necessity of giving effect to 'the plain terms' of a treaty or construing words according to their 'general and ordinary meaning' or their 'natural signification' are to be a starting point or prima facie guide and 'cannot be allowed to obstruct the essential quest in the application of treaties, namely the search for the real intention of the contracting parties in using the language employed by them'." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
- (4) Consider supplementary aides to address ambiguity or avoid absurdity
"[16] (4) If the adoption of this approach to the article leaves the meaning of the relevant provision unclear or ambiguous or leads to a result which is manifestly absurd or unreasonable recourse may be had to 'supplementary means of interpretation' including travaux préparatoires: per Lord Diplock (at 282) referring to art 32 of the Vienna Convention, which came into force after the conclusion of this double taxation convention, but codified an already existing principle of public international law. See also Lord Fraser (at 287) and Lord Scarman (at 294)." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
- (5) Relevance of subsequent commentaries and decisions of foreign courts depend on cogency of reasoning and reputation
"[16] (5) Subsequent commentaries on a convention or treaty have persuasive value only, depending on the cogency of their reasoning. Similarly, decisions of foreign courts on the interpretation of a convention or treaty text depend for their authority on the reputation and status of the court in question: per Lord Diplock (at 283–284) and per Lord Scarman (at 295)." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
- (6) Use of aides is discretionary
"[16] (6) Aids to the interpretation of a treaty such as travaux préparatoires, international case law and the writings of jurists are not a substitute for study of the terms of the convention. Their use is discretionary, not mandatory, depending, for example, on the relevance of such material and the weight to be attached to it: per Lord Scarman (at 294)." (Irish Bank Resolution Corporation Ltd v. HMRC [2020] EWCA Civ 1128, Patten LJ)
Ordinary meaning in light of context and purpose
"(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." (Vienna Convention on the Law of Treaties, Article 31(1))
"[26] As Lord Reed explained in Anson v HMRC [2015] UKSC 44, [2015] STC 1777:
"[56] Put shortly, the aim of interpretation of a treaty is therefore to establish, by objective and rational means, the common intention which can be ascribed to the parties. That intention is ascertained by considering the ordinary meaning of the terms of the treaty in their context and in the light of the treaty's object and purpose. Subsequent agreement as to the interpretation of the treaty, and subsequent practice which establishes agreement between the parties, are also to be taken into account, together with any relevant rules of international law which apply in the relations between the parties. Recourse may also be had to a broader range of references in order to confirm the meaning arrived at on that approach, or if that approach leaves the meaning ambiguous or obscure, or leads to a result which is manifestly absurd or unreasonable."
[27] Later in his judgment Lord Reed commented on the fact that the process of interpretation must take account of the fact that what is being interpreted is an international convention, not a UK statute. He said this:
"[110] Article 31(1) of the Vienna Convention requires a treaty to be
interpreted "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". It is accordingly the ordinary (contextual) meaning which is relevant. As Robert Walker J observed at first instance in Memec [1996] STC 1336 at 1349, 71 TC 77 at 93, a treaty should be construed in a manner which is "international, not exclusively English".
[111] That approach reflects the fact that a treaty is a text agreed upon by negotiation between the contracting governments…"
He went on to emphasise in the same paragraph the courts' predisposition, when faced with "narrow and technical constructions", to favour an interpretation which reflects the "ordinary meaning of the words used and the object" of the treaty." (Royal Bank of Canada v. HMRC [2023] EWCA Civ 695, Falk, Asplin, Nugee LJJ; see also UKSC at §28 [2025] UKSC 2, referring to the same passage)
- Holistic approach
"[75] Article 31 thus requires the terms of a treaty to be interpreted in good faith in accordance with their ordinary meaning, in their context, and in the light of the treaty's object and purpose. A holistic approach is required. Context and object and purpose may be found in the treaty's text, in other words its surrounding provisions, and in the treaty as a whole, including its preamble. The clear focus of article 31 is, accordingly, on seeking to ascertain the ordinary meaning of the relevant terms of the treaty having regard to context, object and purpose of the treaty as a "single combined operation": see JTI Polska sp. z o.o. v Jakubowski [2024] AC 621 (para 26, per Lord Hamblen); and Maritime Delimitation in the Indian Ocean (Somalia v Kenya) [2017] ICJ Rep 3, para 64." (Spain v. Infrastructure Services Luxembourg Sarl [2026] UKSC 9)
- Start with the text
"[41] Thirdly, the primary means of ascertaining the object and purpose of a treaty will generally be its text, read in the context of relevant surrounding circumstances. At the very least the text will be the place to start. This point was made by Mummery J in IRC v Commerzbank AG, IRC v Banco Do Brasil SA [1990] STC 285 ("Commerzbank"), p.298 at para. (3), in a passage cited by Patten LJ in Irish Bank at [16] and also referred to with approval by this court in the earlier cases of Memec plc v HMRC [1998] STC 754, 766 and Re the Trevor Smallwood Trust, Smallwood v Revenue and Customs Comrs [2010] EWCA Civ 778, [2010] STC 2045 ("Smallwood") at [26]. This part of Smallwood was also referred to with approval by Lord Briggs in Fowler at [19]. Mummery J said this:
"Among those principles is the general principle of international law, now embodied in art 31(1) of the Vienna Convention on the Law of Treaties, that 'a treaty should be interpreted in good faith and 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'. A similar principle is expressed in slightly different terms in McNair's The Law of Treaties (1961) p 365, where it is stated that the task of applying or construing or interpreting a treaty is 'the duty of giving effect to the expressed intention of the parties, that is, their intention as expressed in the words used by them in the light of the surrounding circumstances'. It is also stated in that work (p 366) that references to the primary necessity of giving effect to 'the plain terms' of a treaty or construing words according to their 'general and ordinary meaning' or their 'natural signification' are to be a starting point or prima facie guide and 'cannot be allowed to obstruct the essential quest in the application of treaties, namely the search for the real intention of the contracting parties in using the language employed by them'."
[42] A similar point was made with some force by the Supreme Court of Canada in one of the cases on which GEFI relies, Canada v Alta Energy Luxembourg SARL 2021 SCC 49 ("Alta Energy"). In considering an argument that the Canadian general anti-avoidance rule ("GAAR") was engaged in a treaty context, Côté J, giving the judgment of the majority, said this at [58]:
"It must be remembered that the text also plays an important role in ascertaining the purpose of a provision. The proper approach is one that unifies the text, context, and purpose, not a purposive one in search of a vague policy objective disconnected from the text."" (HMRC v. GE Financial Investments [2024] EWCA Civ 797, Falk, Arnold, Whipple LJJ)
- Double tax treaties must have been intended to be expressed in precise terms so that it is clear who is subject to tax
"[93] RBC accepted that the concept of the "right to work" in Article 6(2) of the UK/Canada Convention is an autonomous concept. It is clear that the language of an international treaty must not be interpreted by technical rules of English law: see per Lord Diplock in Fothergill v Monarch Airlines Ltd [1981] AC 251, 281H–282B. However, the UK/Canada Convention is an instrument firmly in the taxing realm. The Contracting States must have agreed its terms on the understanding that those terms would then need to be reflected in their respective domestic laws and would impose tax charges which must be expressed, so far as possible, in precise terms so that it is reasonably clear who is subject to the taxing charge and who is not." (HMRC v. Royal Bank of Canada [2025] UKSC 2, Lady Rose)
- Predictability, certainty and fairness are the bedrock of tax law
"[1] The principles of predictability, certainty, and fairness and respect for the right of taxpayers to legitimate tax minimization are the bedrock of tax law. In the context of international tax treaties, respect for negotiated bargains between contracting states is fundamental to ensure tax certainty and predictability and to uphold the principle of pacta sunt servanda, pursuant to which parties to a treaty must keep their sides of the bargain.
...
[4] In my view, the Minister is asking this Court to use the GAAR to change the result, not by interpreting the provisions of the Treaty through a unified textual, contextual, and purposive analysis, but by fundamentally altering the criteria under which a person is entitled to the benefits of the Treaty, thus frustrating the certainty and predictability sought by the drafters." (Alta Energy Luxembourg SARL v. R (2021) 24 ITLR 346, Supreme Court of Canada)
- Starting with commentaries increases risk of error
"[126] It also follows that the UT made an error of law in reaching the conclusion that GEFI was US resident for Convention purposes. I will not comment further on its detailed reasoning, other than to note that using the MTC and OECD Commentary as its starting point, rather than the words of the Convention itself in the light of its object and purpose, may have increased the risk of error. I should also observe, however, that although it makes no difference in light of the decision of this court, I have some concern that the UT exceeded its jurisdiction in purporting to take a different view of some aspects of the expert evidence to that of the FTT (see [54] above). The UT (and this court) is fixed with the lower tribunal's findings on the evidence unless its decision is set aside due to an error of law. It is only at that point that the UT or this court has power to make its own findings on the evidence: ss.12 and 14 Tribunals, Courts and Enforcement Act 2007." (HMRC v. GE Financial Investments [2024] EWCA Civ 797, Falk, Arnold, Whipple LJJ)
- Construe in an international manner
"[79] Finally, it is well-established that the text of an international treaty or convention is intended to be given the same uniform meaning by all the states which become parties to it. This means that so far as possible the text should be interpreted in a uniform manner and that regard should be had to how it has been interpreted by the courts of different countries, particularly where there is consensus among national courts in relation to the question of interpretation: see, for example, Islam v Secretary of State for the Home Department [1999] 2 AC 629, 657A–B, per Lord Hope of Craighead." (Spain v. Infrastructure Services Luxembourg Sarl [2026] UKSC 9)
"[93] RBC accepted that the concept of the "right to work" in Article 6(2) of the UK/Canada Convention is an autonomous concept. It is clear that the language of an international treaty must not be interpreted by technical rules of English law: see per Lord Diplock in Fothergill v Monarch Airlines Ltd [1981] AC 251, 281H–282B. However, the UK/Canada Convention is an instrument firmly in the taxing realm. The Contracting States must have agreed its terms on the understanding that those terms would then need to be reflected in their respective domestic laws and would impose tax charges which must be expressed, so far as possible, in precise terms so that it is reasonably clear who is subject to the taxing charge and who is not." (HMRC v. Royal Bank of Canada [2025] UKSC 2)
"[110] Article 31(1) of the Vienna Convention requires a treaty to be interpreted "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". It is accordingly the ordinary (contextual) meaning which is relevant. As Robert Walker J observed at first instance in Memec, [1996] STC 1336, 1349, a treaty should be construed in a manner which is "international, not exclusively English".
[111] That approach reflects the fact that a treaty is a text agreed upon by negotiation between the contracting governments. The terms of the 1975 Convention reflect the intentions of the US as much as those of the UK. They are intended to impose reciprocal obligations, as the background to the UK/US agreements from 1945 onwards makes clear. The terms of article 23(2), in particular, broadly reciprocate those of article 23(1), and are important to businesses in the US as well as to the UK investors who may receive dividends or other income from them. In that context, one would be predisposed to favour an interpretation which reflected the ordinary meaning of the words used and the object of the Convention. This is indeed a point which has been repeatedly made, in other cases concerned with the construction of the UK/US double taxation conventions, in the face of narrow and technical constructions: see, for example, Strathalmond v Inland Revenue Comrs [1972] 1 WLR 1511, 1517-1518, and Inland Revenue Comrs v Commerzbank AG; Inland Revenue Comrs v Banco do Brasil SA [1990] STC 285, 303." (Anson v. HMRC [2015] UKSC 44)
- Follow uniform interpretation adopted in Courts of other States
[84]We have referred above to the principle of consistent interpretation of international instruments and the intention that the text of international treaties should be interpreted by the courts of all the states parties as having the same meaning. As Lord Hope said in this context in Islam v Secretary of State for the Home Department, "if it could be said that a uniform interpretation was to be found in the authorities, I would regard it as appropriate that we should follow it" (657B). (See also Basfar v Wong [2022] UKSC 20, [2023] AC 33, para 16 per Lords Briggs and Leggatt. Consistency as to how the courts of different states party to a treaty interpret that treaty also motivated Lord Goff's position in Pinochet (No 3) at 217D, when he referred to the international chaos that would ensue if the courts of different state parties to a treaty reach different conclusions about its meaning.)
[85] In fact, as the Court of Appeal observed at para 62, there is broad international consensus as to the meaning and effect of article 54(1) of the ICSID Convention. The courts of Australia, New Zealand, Malaysia, and the United States have all interpreted article 54(1) as a waiver of adjudicative immunity by each contracting state and, where domestically relevant, a submission to jurisdiction. There is one outlier but as we explain below, little weight can properly be attached to that decision." (Spain v. Infrastructure Services Luxembourg Sarl [2026] UKSC 9)
- Strive to avoid conclusion that treaty provision is otiose
"...Since Article 13(1) covers alienation of immovable property, it must follow that all or at least some of the assets listed in Article 13(4) would not otherwise fall within the definition of "immovable property" in Article 13(1)..." (HMRC v. Royal Bank of Canada [2025] UKSC 2, Lady Rose)
"[75] It is well established that a conclusion that a treaty provision is otiose should be avoided if that is reasonably possible. In Anson v HMRC Lord Reed said this at [94]:
"Following the jurisprudence of the International Court of Justice (eg United Kingdom v Albania (Corfu Channel) [1949] ICJ 4 at 24), the court would be reluctant to conclude that a provision in an agreement made between two governments was otiose, if that conclusion could reasonably be avoided."
[76] The point was also discussed by Mummery J in IRC v Commerzbank AG [1990] STC 285, 299, where he referred to the earlier decision of Avery Jones v IRC [1976] STC 290 in which Walton J had said (at pp.299–300):
"… I think that the courts would always be very slow to refuse to give any meaning at all to a provision in an agreement made between two governments if any sensible construction at all could be placed on it."
Mummery J also referred to IRC v Exxon Corporation [1982] STC 356, where Goulding J departed from the plain meaning of the words in question because, unless he did so, the provision "would fail of effect"." (Royal Bank of Canada v. HMRC [2023] EWCA Civ 695, Falk, Asplin, Nugee LJJ)
- Court rejecting interpretation of immoveable property that would render related provisions otiose
"[103]...If the concept of immovable property is given the very wide construction supported by HMRC, then the question would arise whether the rights mentioned in Article 13(4) specifically for hydrocarbons actually are caught by Article 13(1) regardless of what natural resource they relate to because they are immovable property and hence fall within Article 13(1)." (HMRC v. Royal Bank of Canada [2025] UKSC 2, Lady Rose)
- Negotiating parties presumed to know the other country's tax system
"[34] In R v Melford Developments Inc [1982] 2 SCR 504 at 513, this Court applied the principle that tax treaties do not themselves levy new taxes, they simply authorize the contracting parties to do so. Reciprocity is a fundamental principle underlying tax treaties, as they confer rights and impose obligations on each of the contracting states. Hogan J observed that '[p]arties to a tax treaty are presumed to know the other country's tax system when they negotiate a tax treaty; they are presumed to know the tax consequences of a tax treaty when they negotiate amendments to that treaty' (para [84]). This only makes sense." (Alta Energy Luxembourg SARL v. R (2021) 24 ITLR 346, Supreme Court of Canada)
Ordinary approach leads to ambiguity or absurdity: use supplementary means (e.g. preparatory works)
"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:
(a) leaves the meaning ambiguous or obscure; or
(b) leads to a result which is manifestly absurd or unreasonable." (Vienna Convention on the Law of Treaties, Article 32)
Special meanings
(4) A special meaning shall be given to a term if it is established that the parties so intended." (Vienna Convention on the Law of Treaties, Article 31(4))
Multiple language versions
- Treaties authenticated in multiple languages: each text equally authoritative unless otherwise agreed
"(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." (Vienna Convention on the Law of Treaties, Article 33)
"[26] The UK/Canada Double Taxation Convention of 8 September 1978 came into force on 17 December 1980 and was implemented in UK law by the Double Taxation Relief (Taxes on Income) (Canada) Order 1980 (SI 1980/709). Both the French and the English language texts are equally authoritative..." (HMRC v. Royal Bank of Canada [2025] UKSC 2, Lady Rose)
- Wide range of aides to interpreting wording of treaty in a foreign language
[126] We are able to consider a wide range of legal materials, when required to construe the wording of a treaty in a foreign language; see Lord Wilberforce in Fothergill, at 273F-274A and Lord Scarman in Fothergill, at 294B-295D, in particular 294E-H:
"We know that in the great majority of the contracting states the legislative history, the " travaux preparatoires ", the international case law (‘la jurisprudence'), and the writings of jurists ('la doctrine'), would be admissible as aids to the interpretation of the convention. We know also that such sources would be used in the practice of public international law. They should, therefore, also be admissible in our courts: but they are to be used as aids only.
Aids are not a substitute for the terms of a convention: nor is their use mandatory. The court has a discretion. … the court must first look at the terms of the convention as enacted by Parliament. But, if there be ambiguity or doubt, or if a literal construction appears to conflict with the purpose of the convention, the court must then, in my judgment, have recourse to such aids as are admissible and appear to it to be not only relevant but helpful on the point (or points) under consideration. Mere marginal relevance will not suffice: the aid (or aids) must have weight as well…" (Royal Bank of Canada v. HMRC [2022] UKUT 45 (TCC), Edwin Johnson J and Judge Rupert Jones)
- Legal materials on foreign text not required to be produced by expert
"[154] For the reasons we set out below, in the absence of any expert evidence on the French meaning of the text of the Treaty we must still have regard to the legal texts and other sources when considering whether there is any ambiguity in the English wording of the Treaty and whether the French wording casts any further light on the meaning of Article 6(2).
[155] The legal materials relied upon by Mr Peacock QC as to the meaning of the French text of the Treaty have whatever weight in the argument they are found to have, in the absence of any expert evidence on the meaning of the French version of Article 6. There is no prejudice to HMRC in allowing Mr Peacock QC to pursue what is now Ground 2, on the basis of the legal materials which are relied upon. The absence of expert evidence may or may not be a difficulty for RBC in its pursuit of its case on the French text of the Treaty, but its absence does not preclude RBC from advancing this ground of appeal, and deploying such legal materials as it thinks appropriate in support of this ground of appeal." (Royal Bank of Canada v. HMRC [2022] UKUT 45 (TCC), Edwin Johnson J and Judge Rupert Jones - CA took same approach at §§84 - 87)
- But may affect weight
"[163] This conclusion is not altered by resort to, and comparison with the French text of the Treaty. The legal materials put before us as an aid to the construction of the French version of the Article 6(2) are, at best, ambiguous. They do not establish, let alone clearly establish that the word “la concession” in the French text means, and only means the grant or the original grant of the right to work natural resources. We are unable to say whether the position would have been different if expert evidence had been called to assist us in our consideration of the French text. The position in that respect is settled by the earlier case management decision to refuse permission to call expert evidence." (Royal Bank of Canada v. HMRC [2022] UKUT 45 (TCC), Edwin Johnson J and Judge Rupert Jones)