Revenue and Penal

General

The courts may refuse to apply certain foreign laws where they are against public policy.  Traditionally the courts have also refused to enforce foreign revenue laws.

Common law private international rules do not give effect to foreign penal laws,  revenue or other public laws. Penal laws are those applying sanctions or forfeitures. The identification of the foreign law as penal is undertaken under domestic rules.

The scope of what is or is not penal may be debatable. In some countries, there may be double or treble damages for egregious breach of civil obligations, and there may be punitive damages. Generally, provisions of this nature are not penalties for the purpose of these rules.

Actions by regulatory bodies in a representative capacity would not generally be regarded as penal. Forfeiture of a bail bond may be regarded as penal. Criminal law will be regarded as penal.

Another state’s public laws are not enforced. This covers a variety of official laws such as exchange control, confiscatory rules, regulatory rules and so on. Generally, such laws will be in the interest of the governance of the state concerned.

EU Position

The Brussels Regulation does not cover revenue, customs or administrative matters.  Tax debts and revenue judgments are instead regulated by the Directive on Mutual Assistance for the Recovery of Claims (Council Directive 2010/24/EU, which replaced the earlier 2008/55/EC directive).

This directive provides a legal framework for the mutual assistance and enforcement of tax-related debts (including duties, levies, and other forms of public revenue) within EU member states. Under this directive, EU member states assist each other in the recovery of tax claims, customs duties, and certain other financial claims. This cooperation includes the exchange of information, assistance with notification of claims, and enforcement of recovery actions.

Non-Enforcement Revenue Law

Countries do not traditionally enforce each other’s revenue laws, which were traditionally regarded as quasi-penal. The scope of what comprises a revenue debt may be unclear. It may include property taxes, income taxes, value-added taxes and a range of other taxes with no direct counterpart in the state.

Where persons are outside the jurisdiction, practical issues may arise in compelling evidence.  The courts may request foreign courts to to assist,

The substance of the matter is considered in determining whether an action seeks to enforce a foreign revenue law. If it appears the suit is brought to collect debts to foreign revenue, it is not assisted at common law.The prohibition on indirect enforcement of foreign revenue laws does not prevent the court from assisting the foreign court in obtaining evidence against the taxpayer in the state.

What is Revenue

Revenue laws generally mean taxation laws. Difficulties of classification may arise with certain types of legislation such as social insurance and medical insurance. Some types of payment obligations may be more in the nature of charges for services.

Revenue  been held to include rates and property employers contributions to state health insurance and family benefit schemes. It did not apply to a claim for hospital expenses where the claimant was  obliged to account to the state’s finance hospital commission for sum awarded.

Generally, a revenue law is not voluntary. Genreally, there is no way the benefit can be disclaimed. If the benefit can be released, it is less likely to be categorised as revenue/taxation. For example, water charges might be avoided by disconnection from the service. In contrast TV licensing fees, regardless of reception of the national service/ may be regarded as revenue.

Criminal Laws

The courts do not apply a foreign criminal law.  This is a very well-established principle.  See separately in relation to criminal law. There are provisions for extradition and for the  European Arrest Warrant,  by which persons may be brought before the criminal courts of another state.

Generally, criminal laws are enforced by the state and the objective is to punish misconduct or noncompliance. Traditionally criminal laws did not apply outside a state’s boundaries.

However, legislation has provided that a range of criminal offences including those in relation to terrorism, drug dealing and crimes against children, may be prosecuted within the state although the criminal acts occur abroad.

Foreign Penal Laws

The domestic state court will not assist enforcement directly or indirectly of a foreign penal law. Read literally, penalties might refer to the enforcement of any legislation. However, it has been held to refer to a fine or other exaction imposed by the state for some violation of public order of a criminal complexion. It appears to extend to confiscatory orders and restraint orders. It appears that orders committing a person to prison for contempt of court are not covered.

Penal revenue and public policy rules of another state are governed by the law of the home jurisdiction. Whether a law is penal, revenue or against public policy  in the above sense is determined by the Irish court. The court looks at the substance of the right concerned to be enforced and further considers whether enforcement was directly or indirectly about the execution of the law in the state.

A law will not be penal merely because it has penal sanctions. A distinction to be drawn between public justice of the state and private remedies for an injured person. An order may be not penal even if it is made as a civil order in a prosecution.

Punitive damages are not of themselves penal. On occasions states provide mechanisms to remedy private breaches which may go beyond compensatory.

In a case involving the miners’ strike, the UK authorities sought to sequester monies on deposit in Dublin. A £200,000 fine had been imposed for contempt of court. The High Court considered the sequestration a  raising issue between private litigants. Evidence was given that the process, whether civil or criminal, was essentially penal in effect. The claim was therefore not allowed. In contrast

Non-enforcement does not mean non-recognition. If a foreign contract is valid under its proper law because it evades foreign revenue it will not be enforced in Ireland.

Penal Law Boundary

A penal law may not be apparent on its face.  The court must consider whether it is penal in substance. If the law has the characteristics of a criminal or penal law, then it may be so categorised.

Many offences are regulatory in nature. Many have penalties attached but that does not necessarily mean that they will be categorised as penal. Where the penalties are enforceable by the state on behalf of the community at large, they are more likely to be categorised as penal.

There may be cases where it is difficult to draw a distinction between a private remedy and a public or penal remedy.  The fact that compensation may be awarded for a crime does not make it penal, even if there is a punitive element.

Foreign actions to enforce contempt of court have been held penal. The position may differ under EU Enforcement of Judgments legislation.

Foreign penal rules based on discriminatory basis will not be enforced.  Laws  providing penalties and incapacities based on race, creed, gender et cetera will not be enforced.

Recognition v Enforcement

Enforcement of a foreign penal law is distinguished from application and recognition. A court with take notice of foreign penal laws. Although the enforcement of foreign penal, revenue and public laws is denied at common law it may be recognised as law and taken into account in proceedings before the court.

Foreign penal laws may void a contract that seeks to avoid it. This illegality and nullity, rendering the contract enforceable, may be recognised. This may be so even if it is repellent and contrary to the court’s conscience.

It may be difficult to draw the line between recognition and enforcement. Some cases indicate that a judgement that would increase the likelihood of tax being paid may be subject to the rules. However, this view may be legitimately criticised.

A judgment for debt, including foreign VAT, would be allowed, even though, in a sense, it is the enforcement of a foreign revenue law because the individual concerned is obliged to account for the tax. Generally, the claimant is liable to account to the state for the tax regardless of whether or not he is able to recover the net amount.

A foreign court may seek to obtain or recover property which has been forfeited by way of enforcement of its revenue, penal or public laws. Questions arise as to whether this is based on proprietary rights or on enforcement of the legislation. It would appear that if the case needs to plead the foreign forfeiture law, it falls within the exclusionary rule.