In as much as Andy Warhol's adaption of the Leonardo da Vinci's famous Last Supper is now widely recognized not as a disfiguration but an art work in its own right, future observers may - or may not - recognize properly, i.e. helpfully, enhancingly and undistortedly hyperlinked Internet versions of given texts to be original and thus copyrightable works.  The paper reproduced below may serve as an example; it is the original version (for the hyperlink- and otherwise editorially-enhanced version click here).  Let the reader make up his own mind on the subject (comments welcome to swissbit@solami.com).

The paper used for illustrating the point concerns a scholarly discussion of the text, background and implications of the Convention on Mutual Administrative Assistance in Tax Matters (also called the Interfipol Convention) which, in cooperation with the Council of Europe, was developed in the 80s by the Fiscal Affairs Committee of a governmental, Paris-based organization, namely the industrialized world's Organization for Economic Cooperation and Development (OECD) ⁽¹⁾.  This paper was commissioned by the Good Offices Group of European Lawmakers on the occasion of the Roundtable on International Bureaucratic Lawmaking ⁽²⁾, which was organized in cooperation with the Center for Freedom and Prosperity and held on 9 August 2001 in Washington at the annual convention of The International Platform Association.  It is to serve to illustrate the US role in bringing about this international convention, the concerns expressed and the reservations formulated on the occasion of its ratification by the US Congress, and how the fiscal innovations thus adopted eventually affected not only human rights and other interests of US citizens but US foreign relations and the economy of the United States and its foreign partners.  As such, it is to be discussed at the workshop on "Human Rights Issues Arising from Highly Intrusive Investigative Provisions" which is to be held 13 September 2001 at the The Cambridge International Symposium on Economic Crime", at the IPA Roundtable "Fiscal Sovereignty", to be held 20 October 2001 in Grenada, and at the follow-up symposium for US lawmakers in Dublin in December 2001.  The common objective of these events being to help US lawmakers in particular to exercise their constitutional prerogatives and responsibilities in the increasingly complex, confusing and important field of tax competition, fiscal sovereignty and financial privacy.

The author of this groundbreaking paper, a US lawyer of international renown in the tax field and himself an editor of an international tax journal did an outstanding job despite of his heavy work load and time pressures.  He agreed with the editor - himself a senior expert on the OECD Interfipol Convention ⁽³⁾ - on most questions concerning the presentation of his paper, but was wondering about the most effective way to relay the combination of rare insights developed by the two since 1986.  With the magic rod of its characteristic hyperlinks, the Internet is seen to have opened up for any serious student and reader an entirely new dimension for researching, studying and communicating.  This dimension is yet to be fully appreciated in its multiple implications.  And while the editor of a traditional journal routinely exercises many technical and even text prerogatives outside the effective control or influence of the contributing authors - e.g. choice of titles and subtitles, correction of orthographical and factual errors, clarification of abbreviated terms, clarifying or enhancing text or footnote complements in cornered brackets, choice of fonts, graphics, shortenings, relative emplacement, etc. - a webmeister, i.e. website editor, may feel authorized to make mutually helpful, balanced and reliable use of the magic rod of hyperlinks.  However, the danger of abusive and distortive use of hyperlinks is real.  Striking a balance betwen the author's legitimate concerns, the reader's anticipated interests and the editors additional knowledge, insight and fancy will probably be and remain an area of considerable debate.  This debate appears important, not least for the evolving Citizen-state relationship, with lawmakers and judges best invited to stay clear - in the interest of enhanced self-control and self-responsibility of the Citizens and their responsible use of this Citizen-empowering media.
 
 

NOTES

(1)    For an analysis of the original intent and purpose, genesis and evolution to-date of the OECD, see Anton Keller, "OECD: a Pro-Market Organization Which Lost Its Way" at: http://www.solami.com/OECDhijack.htm, "Waking Up to the OECD" at: http://www.solami.com/ORWELL.htm, and "WEALTH PRIVACY – Project Billiard" at: http://www.solami.com/billiard.htm. The text, annexes, explanatory report, signatories and reservations are accessible at: http://conventions.coe.int/Treaty/en/Treaties/Html/127.htm, and at http://www.solami.com/127.htm (Convention text), http://www.solami.com/127-1.htm (annexes), http://www.solami.com/127exprep.htm (Explanatory Report), http://www.solami.com/127sign.htm (signatories), http://www.solami.com/127res.htm (reservations).

(2)    For a global perspective on administrative rule-making and other ill-considered effects of inadequate supervision by the constitutional lawmakers, see Gilbert Morris, "Signs and Sovereignty - The Growth of Supervenient Authority in the United Nations" at: http://www.solami.com/MorrisUN.htm.  There is a growing body of related phenomena, including the appearance of a self-damaging culture of inadequate knowledge of and respect for a state's own obligations in international relations, thus engendering routine violations of fundamental principles - e.g. in the domaine of fiscal sovereignty.  Such developments not only entail the risk of undermining a country's international position, but may also badly backfire on the global market place where investors may decide to vote with their feet or stay away from roughshod-riding administrations.  For a brief discussion of such a case - involving the controversial Qualified Intermediary regulations which the US' Internal Revenue Service enacted globally behind the back of lawmakers everywhere - and how another outgrowth of international bureaucratic lawmaking, i.e. the Interfipol Convention, may in some cases stand in the way of these latest fiscal aberrations and perhaps even help to get rid of them, see: Anton Keller, "An Orwellian Scheme Turns Into a Boomerang", Good Offices Group of European Lawmakers, Geneva 23 August 2001: http://www.solami.com/USQI.htm

(3)    The Convention was first publicly presented on the editorial pages of the Wall Street Journal Europe under the titles: "Off Base at the OECD" and Anton Keller, "European Taxmen Plot an Orwellian Scheme" (9 May 1986), and "Waking Up to the OECD" (7 July 1986), on the web at: http://www.solami.com/ORWELL.htm
 

II  CONSTITUTION OF THE OECD        §§ 4 - 15

III  OECD HARMFUL TAX COMPETITION INITIATIVE        §§ 16 - 28
    A  Overview        §§ 16 - 23
    B  Remaining Issues over Exchange of Information        §§ 24 - 28

IV  THE CONVENTION ON MUTUAL ADMINISTRATIVE ASSISTANCE IN TAX MATTERS        §§ 29 - 84
    A  Background        §§ 29 - 30
    B  Contents        §§ 31 - 72
        1. Coverage and Goals        §§ 32 - 36
        2. Forms of Assistance        §§ 37 - 51
        3. Service of Documents        §§ 52 - 53
        4. Procedural Requirements of Requesting Assistance        §§ 54 - 65
        5. Implementation and Special Provisions        §§ 66 - 72
    C  Ratification Process        §§ 73 - 84

V  NEED FOR IMPROVED PRIVACY AND HUMAN RIGHTS PROTECTION        §§ 85 - 113
    A  Tax Information Exchange        §§ 86 - 107
        1. Need for International Provisions on Taxpayers Rights        §§ 87 - 89
        2. Current Taxpayer Rights in Bilateral Tax Treaties        §§ 90 - 91
        3. Examples of Challenges to Exchange of Information on Human Rights Grounds        §§ 92 - 97
        4. Other Expressions of Human Rights Concerns        §§ 98 - 107
    B  Mutual Legal Assistance in Criminal Matters        §§ 108 - 113

VI  SUMMARY AND CONCLUSION        §§ 114 - 124
 
 
 
 

I    INTRODUCTION

1    On July 18, 2001, at a hearing of the U.S. Senate Permanent Investigative Subcommittee, U.S. Treasury Secretary Paul O'Neill promised the Subcommittee chair Carl Levin that within one year the U.S. Government will have concluded tax information exchange agreements with at least one half of the so called tax havens of the Organization for Economic Cooperation and Development (OECD) harmful tax competition initiative. ⁽¹⁾ Secretary O'Neill's promise, although obviously naively hyperbolic, underscores the increasing importance of this instrument.

2    This paper discusses exchange of tax information policies at the millennium. It will discuss the Constitution of the OECD, which has been the principal initiator of the effort to develop better international tax cooperation and particularly improved exchange of information policies. The OECD's Constitution will be considered in the context of its decision to undertake and prioritize as a project the harmful tax competition initiative. The salient remaining issues over exchange of information in the OECD harmful tax competition initiative will be considered. The paper will discuss the Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters. The need for improved privacy and human rights protection will be examined in the context of the new enforcement initiatives. Concluding remarks reflect on the need for democracy in the preparation and elaboration of mechanisms by international organizations in order to give them sufficient legitimacy and self-sustainability.

3    Clearly, the rise of new enforcement conventions and initiatives require enhanced protection for taxpayers, third parties, such as fiduciaries, and financial intermediaries. The enhanced protection will guarantee the ability to conduct normal commercial relations in the face of increased enforcement measures and will ensure the fairness and integrity, without which the new enforcement initiatives will not have the confidence and support of the private sector.
 

II    CONSTITUTION OF THE OECD

4    On December 14, 1960, twenty countries agreed on the reconstitution of the Organization for Economic Cooperation and Development (OECD). ⁽²⁾

5    The goals of the OECD are to promote policies designed: "(a) to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability, and thus to contribute to the development of the world economy; (b) to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development; and (c) to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations." ⁽³⁾

6    The Convention sets forth the means to achieve the Convention's aims which its Members are to individually and jointly undertake: "(a) promote the efficient use of their economic resources; (b) in the scientific and technological field promote the development of their resources, encourage research and promote vocational training; (c) pursue policies designed to achieve economic growth and internal and external financial stability and to avoid developments which might endanger their economies or those of other countries; (d) pursue their efforts to reduce or abolish obstacles to the exchange of goods and services and current payments and maintain and extend the liberalization of capital movements; and (e) contribute to the economic development of both Member and non-member countries in the process of economic development by appropriate means and, in particular, by the flow of capital to those countries, having regard to the importance to their economies of receiving technical assistance and of securing expanding export markets." ⁽⁴⁾

7    In addition, the Convention sets forth additional actions of OECD members to further the aims and means in Articles 1 and 2 respectively of the Convention: "a) keep each other informed and furnish the Organization with the information necessary for the accomplishment of its tasks; (b) consult together on a continuing basis, carry out studies and participate in agreed projects; and (c) cooperate closely and where appropriate take coordinated action." ⁽⁵⁾

8    To achieve its aims, the OECD may do three other tasks: "(a) make decisions which, except as otherwise provided, shall be binding on all the Members; (b) make recommendations to Members; and (c) enter into agreements with Members, non-member States and international organizations." ⁽⁶⁾

9    The Convention provides that, if an OECD Member abstains from voting on a decision or recommendation, such abstention will not invalidate the decision or recommendation. It will apply to the other Members, but not to the abstaining Member. ⁽⁷⁾ Another provision of the Convention helps to balance accomplishing the goals of the OECD with the sovereignty of its Members: an OECD decision does not bind any Member until it has complied with the requirements of its own constitutional procedures. ⁽⁸⁾

10    A Council composed of all the OECD Members is the body from which all acts of the OECD derive. The Council may meet in sessions of Ministers or of Permanent Representatives. ⁽⁹⁾

11    Under the Convention the Council may establish an Executive Committee and such subsidiary bodies as may be required for the achievement of the aims of the Organization. ⁽¹⁰⁾

12    The OECD's Convention authorizes the Council, on such terms and conditions as it may determine, "(a) address communications to non-member States or organizations; (b) establish and maintain relations with non-member States or organizations; and (c) invite non-member Governments or organizations to participate in activities of the Organization." ⁽¹¹⁾

13    A question arises whether the OECD's decision to pursue the harmful tax competition (HTC) initiative and especially to spend the amount and type of resources it has devoted has been done in compliance with its constitution. Many observers have contended that the OECD HTC initiative does not support sustainable economic growth and employment or contribute to the development of the world economy nor does it achieve economic growth or internal and external financial stability. Instead, observers have argued that economic stability and world development as well as fiscal stability requires competition among countries. A sound airing of these issues should have preceded any decision by the OECD to undertake the initiative or would seem to be required if the OECD is to continue its work on this initiative.

14    Another essential element of the HTC initiative was the abstention by Switzerland and Luxembourg and their exemption under the OECD Convention from the HTC project. Their ability to exempt themselves raises issues of fairness since the OECD initiative seeks to coerce the targeted countries through economic sanctions even though they are not members of the OECD and have not had an opportunity to participate in the design or implementation of the HTC initiative.

15    The ability of the OECD to invite organizations to participate in its activities raises the issue of whether the out reach of the OECD is broad enough to include enough of the private sector and governments in ways that are truly participatory.
 

III    OECD HARMFUL TAX COMPETITION INITIATIVE (HTC)

    A    Overview

16    In May 1999, the OECD initiated a harmful tax practices initiative designed the combat tax evasion, level the playing field among sovereigns in tax policy, and facilitate better cooperation in tax matters. The OECD subsequently published a blacklist of so-called tax havens and called for the jurisdictions listed to make a commitment to remove their harmful tax practices. A country became a tax haven by having two of the following four elements: (1) no or low taxes; (2) ring-fencing or discrimination in the types of persons eligible for tax preferences (typically offering incentives to only foreigners); (3) lack of transparency in the operation of the tax laws; and (4) inadequate exchange of tax information.

17    The key development in the OECD HTC was the Bush Administration's withdrawal of support for part of the initiative. On May 10, 2001, U.S. Treasury Secretary clarified the U.S. reservations on the Organization of Economic Cooperation and Development's harmful tax practices initiative, creating further uncertainty as to the outcome of the initiative. ⁽¹²⁾

18    O'Neill announced he was "troubled by the underlying premise that low tax rates are somehow suspect and by the notion that any country, or group of countries, should interfere in any other country's decision about how to structure its own tax system. I also am concerned about the potentially unfair treatment of some non-OECD countries. The United States does not support efforts to dictate to any country what its own tax rates or tax system should be, and will not participate in any initiative to harmonize world tax systems. The United States simply has no interest in stifling the competition that forces governments like businesses to create efficiencies." ⁽¹³⁾

19    Mr. O'Neill did express that the U.S. has "an obligation to enforce our tax laws as written because failing to do so undermines the confidence of honest taxpaying Americans in the fairness of our tax system. We cannot turn a blind eye toward tax cheating in any form. That means pursuing those who illegally evade taxes by hiding income in offshore accounts." Mr. O'Neill referred to the use by John Mathewson of a bank account in the Cayman Island, in which 95% of his customers were U.S. citizens. Mathewson's cooperation enabled the IRS to obtain tax evasion convictions and collect substantial back taxes from more than 20 of his clients. ⁽¹⁴⁾

20    During the last week of June 2001, the media announced that the Organization for Economic Cooperation and Development had reached in principle a compromise on its harmful tax practices initiative. ⁽¹⁵⁾

21    Since the OECD's Fiscal Affairs Committee meeting June 26-27, the organization refocused its program on the exchange of banking and financial information with OECD governments and away from pressuring jurisdictions identified as tax havens to reset their tax rates. The initiative will now only require the 32 so called tax haven countries to agree to take action on exchange on tax information and transparency. The deadline of July 31, 2001 by which those tax havens failing to make the commitment would be put on the blacklist has been extended until November 30, 2001. 

22    On June 29, 2001, the OECD announced that Aruba is the tenth jurisdiction to make a commitment to the harmful tax practices principles. The other jurisdictions that have made similar commitments are Bermuda, the Cayman Islands, Cyprus, the Isle of Man, Malta, Mauritius, the Netherlands Antilles, San Marino, and the Seychelles. ⁽¹⁶⁾

23    The OECD harmful tax competition initiative has as its purpose to level the playing field in the imposition of taxes and ability to raise revenue. It cited the erosion of tax base by preferential regimes and especially by tax havens. The definition of a tax haven was the existence of two or more of the following criteria: zero or low tax rates, ring-fencing or discrimination.
 

    B    Remaining Issues over Exchange of Information ⁽¹⁷⁾

24    In November 2000, the OECD released the OECD HTC Memorandum of Understanding, which contains a series of obligations that the targeted "tax haven"jurisdictions were required to undertake if they were to avoid the blacklist and its attendant sanctions. Major problems remain in the proposed obligations in the OECD HTC Memorandum of Understanding. ⁽¹⁸⁾ They significantly exceed those called for in the OECD reporting, "Improving Access to Bank Information for Tax Purposes." ⁽¹⁹⁾ The latter report was designed to encourage agreement within the OECD on the best way to improve cooperation. The latter report constantly provides alternative options and uses words such as "encourages" whereas the OECD HTC MOU makes the obligations mandatory without any wiggle room. In fact, the targeted countries would be required to have in place administrative practices so that the legal mechanism for exchange of information functions effectively can be monitored, including having personnel responsible for ensuring that requests for information are answered promptly and efficiently and that personnel are trained or experienced in obtaining such information. Ironically, one OECD country, Canada, has admitted that it does not have sufficient resources to conduct exchanges of information and hence believe that such exchanges cannot be reciprocal. ⁽²⁰⁾ If Canada believes that such exchanges cannot be reciprocal due to its shortage of administrative resources, then the much smaller targeted countries are not surprisingly also taking the position that such exchange obligations cannot be reciprocal and, similar to the Canadian viewpoint, would want to take a restrictive view of such obligations. The targeted countries have a more important perspective: the need to protect their economic security and well being. ⁽²¹⁾

25    In essence, the OECD countries are signaling that the targeted countries should respond forthwith to the requests for exchange of information and have derided some of the targeted countries for taking too much time responding to requests. However, the time for response is often to ensure that the requests are properly concerned with an offense covered by the treaty. Further, sometimes an interested person may have recourse to a court to protect their own rights and ensure that the request complies with the treaty, the constitution, and any other applicable provisions.

26    Even some OECD members (i.e., Austria, Luxembourg and Switzerland) have insisted on covering criminal tax enforcement through a Mutual Assistance in Criminal Matters Treaty.

27    Hence, the MOU to the U.S.-Luxembourg tax treaty explains that certain information of financial institutions may be obtained and provided to "certain U.S. authorities" only in accordance with the proposed U.S.-Luxembourg MLAT. As a result, the U.S. delayed the effective date of the income tax treaty to coincide with the MLAT's taking effect. ⁽²²⁾

28    The upshot of these and other controversies over exchange of information are that, even if the OECD only proceeds on exchange of tax information, there will be many substantive and procedural policy disputes and they will concern achieving a level playing field between the OECD and targeted countries in the making of the policy and its fair implementation. Indeed, there are just as many controversies involving transparency, ⁽²³⁾ but it is instructive to consider the privacy and human rights implications of the counterpart initiative developed by the G7/OECD Financial Action Task Force (FATF).
 

IV    CONVENTION ON MUTUAL ADMINISTRATIVE ASSISTANCE IN TAX MATTERS

    A    Background

29    On January 25, 1988, the Council of Europe and the OECD opened for signatures the Convention on Mutual Administrative Assistance in Tax Matters. ⁽²⁴⁾ On June 28, 1989, the U.S. signed it. On September 18, 1990, the U.S. Senate approved the treaty and it entered into force with respect to the U.S. on April 1, 1995.

30    Countries that are members of the Council of Europe, the Organization for Economic Cooperation and Development (OECD), or both, are eligible parties to the treaty. Currently the treaty is in force in the following eight countries: Denmark, Finland, Iceland, the Netherlands, Norway, Poland, Sweden and the U.S. Belgium has signed, but not ratified. ⁽²⁵⁾
 

    B    Contents

31    The Convention is not the usual tax treaty. While it has some vague references in the protocol, the Convention does not refer to the elimination of double taxation. Instead, it provides a mutual assistance treaty to prevent evasion and avoidance of all taxes other than customs duties. It provides for a wide range of exchange of information between any two countries that are parties to the Convention. It also provides for assistance in the collection of taxes and in the services of documents, but the U.S. has entered reservations on these types of assistance. Hence, the U.S. will not assist in collecting taxes and will only serve documents by mail.
 

        1    Coverage and Goals

32    The Convention provides, on a multilateral basis, for administrative assistance in respect to income, capital (wealth), social security and other taxes. Administrative assistance would include the exchange of information, simultaneous tax examinations, assistance in collection, and service of documents.

33    For purposes of international criminal law, the Convention has limited application. The Convention is meant to cover the preparation of criminal proceedings in the tax area to be initiated before the judicial bodies. However, after criminal proceedings have started before a judicial body, the Convention does not apply, in order to avoid any conflict with the Convention on Mutual Assistance in Criminal Matters. ⁽²⁶⁾ Another part of the Convention that will have potentially significant impact on international criminal law is the provision authorizing the use of information exchanged under the Convention in criminal proceedings in the requesting state. In this regard, Article 4, Paragraph 2 of the Convention provides that:

34    A Party may use information obtained under this Convention as evidence before a criminal court only if prior authorization has been given by the Party which has supplied the information. However, any two or more Parties may mutually agree to waive the condition of prior authorization.

35    The U.S. Department of Treasury decided to waive the condition of prior authorization despite the fact that the position was controversial. ⁽²⁷⁾

36    The parties began negotiating the Tax Convention in order to improve cooperation in tax matters, reduce the incidence of tax evasion, and otherwise enhance tax administration. The Tax Convention will substantially affect investor confidentiality because of its provisions for multilateral administrative assistance with respect to income, capital (wealth), social security, and other taxes. ⁽²⁸⁾ Administrative assistance will include exchanges of information, simultaneous tax service of documents. ⁽²⁹⁾ The Tax Convention should eventually result in developing more standardized procedures for information exchanges and enhanced worldwide cooperation in tax matters.
 

        2    Forms of Assistance

37    In Chapter III, the Convention provides for the exchange of tax information either on request, automatically, or spontaneously. ⁽³⁰⁾ The signatories must exchange any information that is "forseeably relevant to:

• the assessment and collection of tax, and the recovery and enforcement of tax claims, and

• the prosecution before an administrative authority or the initiation of prosecution before a judicial body." ⁽³¹⁾

39    A signatory must provide administrative assistance whether the person affected is a resident or national of a signatory or of any other state. ⁽³³⁾ The Convention provides for five main methods of exchanging information: on request; automatic exchange; spontaneous exchange; simultaneous tax examination; and tax examination abroad. The enumeration of the five methods of exchanging information does not limit the possibilities of exchanging information. ⁽³⁴⁾ Exchange of information may occur in a variety of ways acceptable to the competent authorities, such as personal contact, telex, or telephone and exchange of magnetic tapes, but when exchange is oral, it is normal to confirm it in writing afterwards. To accelerate formalities, especially since time is often critical in tax examinations, the competent authorities can agree to delegate powers for more direct contact, such as by telephone. ⁽³⁵⁾

40    A signatory may, by a declaration addressed to one of the depositories, indicate that, according to its internal legislation, its authorities may inform its resident or national before it obtains and exchanges the information requested. ⁽³⁶⁾ Apparently, because of this provision and the opposition of the International Chamber of Commerce and other private sector groups, Treasury officials announced that they would consider or would actually issue regulations providing for notification to U.S. taxpayers. Just as important, the Senate Committee on Foreign Relations recommended its approval of the Convention on the basis of its understanding that "the Administration intends to adopt an administrative procedure under which it will generally notify an affected taxpayer who is a U.S. citizen or resident of specific requests and spontaneous exchanges." ⁽³⁷⁾

41    The OECD Explanatory Report related that some national tax systems already had provisions requiring the state to inform the person concerned before information is communicated to another and that other states (e.g., the U.S.) were contemplating the introduction of similar practices, either on the occasion of the legislative approval of the multilateral Convention or in the framework of general measures to protect the taxpayer. The person "concerned" by an information request is defined by the provisions of national law. It can be a national or resident of the requested state about whom information is to be furnished to another state in order to enable it to verify or establish its own tax claim on the said national or resident. It can also be a firm, operated in the requested state by one of its nationals or residents, from which information is to be obtained for communication to another state in order to enable the latter to verify or establish its tax claim on one of its own taxpayers who has a business relationship with the firm operated in the requested state. ⁽³⁸⁾

42    At the request of the applicant state, the requested state must provide the applicant with any information within the scope of Article 4 (assessment, collection, recovery and enforcement and prosecution), which concerns particular persons or transactions. ⁽³⁹⁾ Requests can be expressed orally and confirmed in writing afterwards. For instance, where information is required urgently, such as in cases involving itinerant activities, a request in writing is too cumbersome and an applicant state can make a request initially by telephone or telex. ⁽⁴⁰⁾

43    A requested country is to use its subpoena or summons powers or any other powers that it has under its own laws to collect information requested by the other country. ⁽⁴¹⁾

44    The Convention provides that, with respect to categories of cases and in accordance with procedures that they must determine by mutual agreement, two or more signatories must automatically exchange the information in Article 4. ⁽⁴²⁾ Such information is typically bulk information consisting of payments from and tax withheld in the furnishing state, i.e., dividends, interest, and royalties, and is transmitted automatically on a routine basis. ⁽⁴³⁾ The aim of the signatories by exchanging such information is to improve compliance and detect fraud that otherwise would not have come to light. The signatories are to try to exchange such information in the most efficient way possible having regard to its bulk character. ⁽⁴⁴⁾ The OECD Committee on Fiscal Affairs has devised a standard form for automatic exchanges which signatories should as far as possible make use of when exchanging information, since standardization of the forms would facilitate the processing of bulk information by diverse countries and dispense with the need for translation by the use of standard (number) codes by all the countries concerned for the same items of income or capital, the acceleration of the exchange, a reduction in the workload of the competent authorities, and enable the information received to be used directly by case officers. ⁽⁴⁵⁾

45    The Convention provides for spontaneous exchange of information. A signatory must, with prior request, transmit to another signatory information of which it has knowledge in the following circumstances: (a) it has grounds to suppose that a loss of tax may be occurring in the other signatory; (b) a person liable to tax obtains a reduction in or an exemption from tax in the first-mentioned signatory that would give rise to an increase in tax or to liability to tax in the other signatory ; (c) business dealings between a person liable to tax in another signatory country are conducted through one or more countries in such a way that a savings in tax may result in one or the other signatory or in both; (d) a signatory has grounds to suppose that a saving of tax may result from artificial transfers of profits within groups of enterprises; and information transmitted to the first-mentioned signatory by the other signatory has enabled information to be obtained that may be relevant in assessing liability to tax in the latter signatory. ⁽⁴⁶⁾

46    Each signatory must take such measures and implement such procedures as are necessary to ensure that information mentioned for spontaneous exchanges will be made available for transmission to another signatory. ⁽⁴⁷⁾ The provisions on spontaneous exchange of information parallel the relevant provisions in the European Communities Directives for mutual assistance between competent authorities in tax matters. ⁽⁴⁸⁾ The IRS Internal Revenue Bulletin also has provisions calling for spontaneous exchanges with countries with which the IRS has reciprocal requirements in this regard.

47    The Convention provides for simultaneous tax examinations. At the request of one signatory, two or more signatories must consult to determine cases and procedures for simultaneous tax examinations. Each signatory involved must decide whether or not it wants to participate in a particular simultaneous tax examination. ⁽⁴⁹⁾ A simultaneous tax examination is defined as an arrangement between two or more signatories to examine simultaneously, each in its own territory, the tax affairs of a person or persons in which they have a common or related interest, with a view to exchanging any relevant information that they so obtain. ⁽⁵⁰⁾ Such examinations may be conducted with respect to a single person resident in one of the signatories who performs activities in another signatory(ies) (e.g., individuals resident in the first signatory who carry out professional or other activities in the other signatories as well as enterprises resident in one signatory that operate through a permanent establishment in the other), as well as related persons resident in two or more signatories. They may also in suitable cases comprise unrelated persons, resident in different signatories that, although not under common control and/or ownership, still share close trading or other links. The second and third cases apply mainly to companies. The second case covers multinational enterprises that carry out intra-group transactions that may involve offshore financial centers. The third case will comprise enterprises which, although not related, trade together so closely that information about the affairs of one (i.e., the prices of goods sold and purchased) would be of use to the authority responsible for the tax affairs of the other. ⁽⁵¹⁾

48    Once agreement has been reached on implementation of a simultaneous tax examination, the tax administration personnel in charge of the case selected will consider with their counterparts from the other signatory or signatories involved their examination plans, the periods (for example tax years) to be covered, possible issues to be developed and target dates. Once agreement is made on the general lines to be followed, officials of each state will separately carry out their examination within their own jurisdiction. ⁽⁵²⁾

49    The Convention provides for tax examinations abroad. Traditionally, exchange of information under income tax conventions has been done in writing, which is a time-consuming and sometimes not effective process. Rapid action may be required to combat tax evasion in relation to international hiring out of labor or to itinerant activities. Hence, tax authorities often find it invaluable to conduct tax examinations abroad. The Convention provides for this possibility. The decision as to whether the foreign tax representative may be permitted to be present lies exclusively with the competent authority of the state where the examination is to occur. In some states, the foreign representative's presence would be regarded as an infringement of that country's sovereignty or contrary to its policy or procedure. In other states, such presence is admitted only if the taxpayer does not object to it. Other countries consider the presence on their territory of a representative of a foreign authority to be acceptable on the condition that the tax examination is carried out strictly in conformity with their law and practice. The provisions of Article 9 of the Convention on tax examinations abroad accommodate such considerations. ⁽⁵³⁾

50    At the request of the competent authority of the applicant state, the requested state may permit representatives of the applicant state to be present at the appropriate part of a tax examination in the requested state. ⁽⁵⁴⁾ This type of extraordinary assistance should not be requested unless the applicant state is persuaded that the examination in the foreign country will contribute to a considerable extent to the solution of a domestic case. A signatory should not make a request for attendance in minor cases. However, this does not mean necessarily that large amounts of tax must be involved in the individual case. Another justification for a request would be the fact that the matter is of special importance to other domestic tax cases or that the foreign examination is regarded as part of an examination on a large scale embracing domestic enterprises and residences. The applicant state should specify, as thoroughly as possible, the motives for the request, and provide a clear description of the domestic tax case which is the basis for it. ⁽⁵⁵⁾ If the request is met, the requested state must, as soon as possible, notify the applicant state about the time and place of the examination, the authority or official designated to carry out the examination and the procedures and conditions required by the requested state for the conduct of the examination. All decisions with respect to the conduct of the tax examination must be made by the requested state. ⁽⁵⁶⁾ A signatory may inform one of the depositories of its intent not to accept, as a general rule, such requests to conduct tax examinations abroad. The signatory can make or withdraw such declaration at any time. ⁽⁵⁷⁾

51    Articles 11 through 16 of the Convention concern recovery of tax claims, whereby one signatory must help another to recover tax claims as if they were its own, including taking measures of conserving the tax claims.
 

        3    Service of Documents

52    The Convention provides that, at the request of the applicant state, the requested state must serve upon the addressee documents, including those relating to judicial decisions, which emanate from the applicant state and which relate to a tax covered by the Convention. ⁽⁵⁸⁾ A signatory may effect service of documents directly through the mail on a person within the territory of another signatory. ⁽⁵⁹⁾ Difficulties in serving documents abroad may apply in the case of a tax claim against a non-resident.
53    The Convention also requires the requested state to serve documents (a) by a method prescribed by its domestic laws for the service of documents of a substantially similar nature; and (b) to the extent possible, by a particular method requested by the applicant state or the closest to such method available under its own laws. ⁽⁶⁰⁾ The U.S. has reserved on service, except by mail. One way whereby a signatory can avoid the obvious increase in workload in providing assistance in serving documents is to limit service to mailing notices of assessment, tax demands or other documents. Difficulties may arise where a state regards the sending by post of official documents of another state to its residents as an infringement of its sovereignty.⁽⁶¹⁾
 

        4    Procedural Requirements of Requesting Assistance

54    The Convention requires that, when making a request for assistance, the applicant state must indicate where appropriate: (a) the authority or agency that initiated the request made by the competent authority; (b) the name, address and any other particulars assisting in the identification of the person in respect of whom the request is made; (c) in the case of a request for information, the form in which the applicant state wishes the information to be furnished in order to meet its needs; (d) in the case of a request for assistance in recovery or measures of conservancy, the nature of the tax claim, the components of the tax claim and the assets from which the tax claim may be recovered; (e) in the case of a request for service of documents, the nature and the subject of the document to be served; and (f) whether it is in conformity with the law and administrative practice of the applicant state and whether it is justified in light of Article 19, which sets forth the reasons wherein a requested state may decline to fulfill a request. ⁽⁶²⁾ The more information provided by the applicant state the easier for the requested state to obtain and furnish complementary information which may be needed in order to meet the request. For the taxpayer, it may help to elucidate which claim is meant. ⁽⁶³⁾

55    If a requested state has knowledge later of any other information relevant to the request for assistance, it must forward it to the requested state. ⁽⁶⁴⁾

56    The requested state is not required to accede to a request if the applicant state has not pursued all means available in its own territory, except where recourse to such means would give rise to disproportionate difficulty. ⁽⁶⁵⁾

57    The Convention specifies the manner in which a requested state must respond to the request for assistance. If it complies with the request for assistance, the requested state must inform the applicant state of the action taken and of the result of the assistance as soon as possible. ⁽⁶⁶⁾ If it declines the request, the requested state must inform the applicant state of that decision and the reason for it as soon as possible. ⁽⁶⁷⁾ If the applicant has specified the form in which it wishes the information to be furnished and the requested state is in a position to do so, it must furnish it in the form requested. ⁽⁶⁸⁾

58    The Convention provides for the protection of persons and sets forth limits to the obligation to provide assistance. The Convention does not affect the rights and safeguards secured to persons by the laws or administrative practice of the requested state. ⁽⁶⁹⁾ Exception in the case of time-limits for collection of tax measures, the Convention must not be construed so as to impose on the requested state the obligation: (a) to carry out measures at variance with its own laws or administrative practice or the laws or administrative practice of the applicant state; (b) to carry out measures that it considers contrary to public policy or to its essential interests; (c) to furnish information that is not obtainable under its own laws or its administrative practice; (d) to supply information that would disclose any trade, business, industrial, commercial or professional secret, or trade process, or information the disclosure of which would be contrary to public policy or to its essential interests; (e) to provide administrative assistance if and insofar as it considers the taxation in the applicant state to be contrary to generally accepted taxation principles or to the provisions of a convention for the avoidance of double taxation, or of any other convention which the requested state has concluded with the applicant state; and (f) to provide assistance if the application of this Convention would lead to discrimination between a national of the requested state and nationals of the applicant state in the same circumstances. ⁽⁷⁰⁾

59    What may jeopardize public policy or endanger any of the essential interests of a requested state is for the two states to interpret in each particular case. It includes interests of persons when the latter have a "national" dimension. Hence, public security and economic interests may be included in this concept. ⁽⁷¹⁾

60    With respect to which practices in the applicant state may be considered "contrary to generally accepted taxation principles", the requested state may consider, for instance, that taxation in the applicant state is confiscatory, or the taxpayer's punishment for the tax offense would be excessive. ⁽⁷²⁾ The requested state may also decline to provide assistance under subparagraph (e) as "contrary to generally accepted taxation principles" or to the provisions of a income tax convention where it considers taxation contrary to such convention rules as rates of withholding, the definition of permanent establishment and the determination of their taxable profits and so on. ⁽⁷³⁾

61    The Convention has an article on secrecy. A signatory obtaining any information under the Convention must treat it as secret in the same manner as information obtained under the domestic laws of the signatory, or under the conditions of secrecy applying in the supply country if such conditions are more restrictive. ⁽⁷⁴⁾ A signatory must disclose any information obtained only to persons or authorities (including courts and administrative or supervisory bodies) involved in the assessment, collection or recovery of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, taxes of that signatory. Only the persons or authorities specified (tax competent authorities or prosecutors and their assistants in the event of a criminal prosecution and other officials and persons involved in the adjudication in question) may use the information and then only for such purposes. They may disclose it in public court proceedings or in judicial decisions relating to such taxes, subject to prior authorization by the competent authority of the supplying country. However, any two or more signatories may mutually agree to waive the condition of prior authorization. ⁽⁷⁵⁾

62    If a signatory has made a reservation to any provision in the Convention (e.g., as the U.S. has to the collection provisions), any other signatory obtaining information from the first signatory must not use it for the purpose of a tax in a category subject to the reservation. Similarly, the signatory making such a reservation must not use information obtained under the Convention for the purpose of a tax in a category subject to the reservation. ⁽⁷⁶⁾

63    A signatory receiving information may use it for other purposes under the laws of the supplying country when the competent authority of the supplying country authorizes such use. Information provided by a requested state to another signatory may be transmitted by the latter to a third country, subject to prior authorization by the competent authority of signatory supplying such information. ⁽⁷⁷⁾

64    Proceedings concern measures taken under the Convention by the requested state must be brought only before the appropriate body of the requested state. ⁽⁷⁸⁾ Proceedings concerning measures taken under the Convention by the applicant state, in particular those that, in the field of recovery, concern the existence or the amount of the tax claim or the instrument allowing its enforcement, must be brought only before the appropriate body of that state. If such proceedings are brought, the applicant state must inform the requested state that must suspend the procedure pending the decision of the body in question. However, if asked by the applicant state, the requested state must take measures of conservancy to safeguard recovery. The requested state can also be informed of such proceedings by any interested person. On receipt of such information the requested state must consult on the matter, if necessary, with the applicant state. ⁽⁷⁹⁾

65    As soon as a final decision in the proceedings occurs, the requested state or the applicant state, as the case may be, must notify the other state of the decision and of the implications that it has for the request for assistance. ⁽⁸⁰⁾
 

        5    Implementation and Special Provisions

66    The Convention provides for implementation measures. The signatories must communicate with each other for the implementation of this convention through their respective competent authorities. The competent authorities may communicate directly for this purpose and may authorize subordinate authorities to act on their behalf. The competent authorities of two or more signatories may mutually agree on the mode of application of the Convention among themselves. ⁽⁸¹⁾

67    If the requested state considers the application of this Convention in a particular case would have serious and undesirable consequences, the competent authorities of the requested and of the applicant state must consult each other and try to resolve the situation by mutual agreement. ⁽⁸²⁾

68    A coordinating body composed of representatives of the competent authorities of the signatories monitors the implementation and development of the Convention, under the aegis of OECD. To this end, the coordinating body will recommend any action likely to further the general aims of the Convention. In particular, the body acts as a forum for the study of new methods and procedures to increase international cooperation in tax matters and, where appropriate, it may recommend revisions or amendments to the Convention. Signatories that have signed but not yet ratified, accepted or approved the Convention are entitled to be represented at the meetings of the coordinating body as observers. ⁽⁸³⁾ A signatory may request the coordinating body to furnish opinions on the interpretation of the Convention's provisions. ⁽⁸⁴⁾

69    If difficulties or doubts arise between two or more signatories regarding the implementation or interpretation of the Convention, the competent authorities of the signatories will endeavor to resolve the matter by mutual agreement. The agreement will be communicated to the coordinating body. ⁽⁸⁵⁾

70    The provisions of the Convention do not limit, nor are they limited by, those contained in existing or future international agreements or other arrangements between the signatories concerned or other instruments that relate to cooperation in tax matters. ⁽⁸⁶⁾

71    Each signatory may specify the territory or territories to which the Convention applies and can later by a declaration to one of the depositories modify the decision. ⁽⁸⁷⁾

72    The Tax Convention should eventually result in standardized procedures for information exchanges and enhanced worldwide cooperation in tax matters. 
 

    C    Ratification Process

73    On January 20, 1987, before the Convention was initially opened for signature, U.S. Assistant Treasury Secretary for Tax Policy, O. Donaldson Chapoton said he hoped it would go into effect that year. Although the U.S. had not formally decided to sign, Mr. Chapoton reportedly stated that he was optimistic the Convention would receive a positive recommendation and would be signed later in the year. He signaled the Convention would be particularly important for tax cooperation among governments without bilateral treaties. ⁽⁸⁸⁾

74    On May 13, 1988, Charles Triplett, Deputy Associate IRS Chief Counsel (International), and William Roth, Director of IRS' Office of International Programs, said that, as a result of the OECD Draft Convention, the IRS and Treasury were considering whether to notify taxpayers and allow them to appeal foreign governments' request for information. ⁽⁸⁹⁾ In particular, Article 21 of the OECD Convention provides limits to the obligation of the requested state to provide assistance. For instance, the requested state need not supply information that is not obtained under its own laws or its administrative practice or to supply information that would disclose any trade, business, industrial, commercial or professional secret, or trade process, or information, the disclosure of which would contravene public policy. It need not provide administrative assistance, if it would lead to discrimination between a national of the requested state and nationals of the applicant state in the same circumstances. The Commentary to the Article explains that, if a requested state has no power to take measures of conservancy, it could decline to take such measures on its behalf, or if seizure of goods to satisfy a tax claim is not allowed in the applicant State, the requested State is not obliged to seize goods when providing assistance in collection. Hence, only those powers and practices that the treaty states have in common are the ones the requested State is obliged to implement.

75    Article 23(1) provides that proceedings relating to measures taken under the convention by the requested state will be brought only before the appropriate body of that state. The OECD Commentary to the Article specifies that the Article confers powers on the authority and the question arises where the individual is entitled to require the authority to exercise them especially where the failure to exercise a power violates a right guaranteed by the national law of the authority in question. Specifically, when a taxpayer wants to resist the recovery of a tax or the enforcement of the tax laws, two grounds normally exist in the laws of a treaty country on which the tax claim can be resisted. Either the taxpayer can contest the existence of the enforceability of the claim, or he can try to contest the enforcement measures themselves.

76    Since the competent authority of the treaty country may not always have the entire information on a case, only the taxpayer involved may be able to provide the competent authority with the information to know when and timely take actions allowed under the provisions of Article 21 and 23. The ability of the requested State to have the input of the taxpayer may determine the very liberty of the taxpayer and his property. ⁽⁹⁰⁾

77    The potentially intrusive results of the Tax Convention's broad scope have helped to engender the opposition of many business groups, including member groups' of the International Chamber of Commerce (ICC). ⁽⁹¹⁾ The ICC member groups also criticized the Tax Convention because it fails to distinguish adequately between tax evasion and legitimate tax avoidance. ⁽⁹²⁾ Another criticism is that only national, and not state, governments are involved in tax cooperation under the Tax Convention. Some European countries object to the possibility of American states participating in tax information exchanges themselves and with the federal government in the U.S. concerning matters such as unitary taxation, and have declined to sign the Tax Convention. ⁽⁹³⁾

78    On May 23, 1989, speaking at a program of the "Foreign Investment in the United States" seminar in New York City, Anne Fisher, office of International Tax Counsel, U.S. Department of the Treasury, stated that the U.S. was planning to sign the Convention in two weeks. Because many U.S. income tax treaties are very old, the Convention would strengthen cooperation in international tax matters, even with many countries with which the U.S. already has income tax treaties. This theory seems to refute the contention of the U.K. Government that it and other OECD countries already have enough tax treaties with adequate exchange of information and cooperation procedures. In order to obtain support from business and bar groups, Fisher explained that the U.S. Treasury is strengthening taxpayer protection and will share this information with the business community. In response to an inquiry of Marshall J. Langer, Counsel, Shutts & Bowen, whether Treasury plans to extend the taxpayer notification to bilateral tax treaties as well, Fisher stated that it does so plan for the long-term, but first the U.S. wants to try it with the COE/OECD Convention. ⁽⁹⁴⁾

79    During the discussion of the ratification process, on May 10, 1989, James P. Springer, International Tax Counsel, U.S. Department of Justice, at a briefing of the Committee on International Tax Law, Section of International Law & Practice, American Bar Association, explained the provisions that the Treasury would adopt to provide certain U.S. taxpayers with notification of a request and an opportunity to object to the U.S. assisting such requests. Springer stated that the bulk of requests for assistance under income tax conventions are, and will continue to be, third party requests for records of banks, accounting firms, and attorneys. Springer explained that Treasury does not intend at least initially to apply the potentially proposed notification procedures to bilateral treaties. According to Springer, a minor difference between the proposed resolution of the Committee on International Tax, Section of International Law & Practice, ABA, and the letter of September 28, 1988, from Irwin L. Treiger, Chair, Section of Taxation, is that, unlike the Section of Taxation, the Committee on International Tax does not recommend recourse to court if a taxpayer is aggrieved by an administrative decision on a request for information. ⁽⁹⁵⁾

80    At the time of the discussion on the Convention on Mutual Administration Assistance in Tax Matters, the Senate Foreign Relations delayed a scheduled mark-up of six pending Mutual Legal Assistance Treaties (MLATs) at the request of Senator Jesse Helms, who raised concerns as to whether the MLATs sufficiently protected the constitutional rights of individuals. In particular, Sen. Helms mentioned concern about the fact that, in comparison to the U.S., foreign governments had made far greater use of the then four U.S. MLATs. In the future the U.S. may receive many applications from overseas to deal with individuals who may be using tax shelters in the U.S. that are considered criminal evasion abroad. ⁽⁹⁶⁾

81    On December 20, 1988, the United Kingdom announced that it will not sign the Convention. At that time the Federal Republic of Germany and Malta had announced that they would not sign. The U.K. announced that the reasons for its decision include its extensive network of double taxation treaties and its European obligations, which already provide enough cooperation. ⁽⁹⁷⁾

82    In 1988, the U.S. Government announced it had decided to reserve recovery of taxes because the provisions on assistance in collecting taxes in the current U.S. treaties are not used and cooperation in the collection of taxes tends to be controversial in the U.S. 

83    In November 1988, the U.S. Department of Treasury convened a meeting at which it expressed its desire for persons knowledgeable and experienced in the legal areas covered by the Convention to make suggestions on the position(s) the U.S. should take on any implementing regulations. Anne Fisher, Office of International Tax Counsel, U.S. Department of Treasury, noted the Treasury was preparing international procedures to apply the Convention once it takes effect. These procedures would provide taxpayers affected by the Convention with notification and the right to participate in whether, and how, the U.S. responds to a request for cooperation. The procedures will provide more expanded notification and due process than the IRS presently affords taxpayers under bilateral tax treaties. ⁽⁹⁸⁾ At this time, bar associations, including the Subcommittee on International Assistance in Criminal Matters, White Collar Crime Committee, Criminal Justice Section, American Bar Association, and the Tax Section, Florida Bar, prepared and circulated a draft recommendation. ⁽⁹⁹⁾

84    Undoubtedly the promise of the Treasury to issue regulations giving notice to taxpayers affected by requests for information to object and participate in the requests for information mollified the Senate and concerned taxpayers about the scope, intrusiveness, and potential adverse impact of the Convention on taxpayers, as expressed by the Senate Committee on Foreign Relations, ⁽¹⁰⁰⁾ when it voted to approve ratification, and by the ICC, bar association, and other interested groups.
 

V    NEED FOR IMPROVED PRIVACY AND HUMAN RIGHTS PROTECTION

85    Globalization brings enhanced enforcement cooperation, both formal and informal, through tax enforcement instruments and more broad-based criminal cooperation instruments. In some cases, the new instruments, such as the Convention for Mutual Administrative Assistance in Tax Matters, has provided for mechanisms of enhanced fairness and process for affected taxpayers, but signatory countries have not taken advantage of their right to incorporate such procedures into their application of the Convention. Other new instruments, such as the U.S. Mutual Assistance in Criminal Matters Treaties, instead of providing for enhanced human rights and privacy protections, have intentionally or inadvertently downgraded such protections. ⁽¹⁰¹⁾
 

    A    Tax Information Exchange

86    As governments continue to give their revenue authorities more extensive powers, such powers will require extensive safeguards if abuse is to be prevented. In particular, in countries such as the U.S. where revenue authorities can apply substantial criminal sanctions, the taxpayer is entitled at least to the safeguards he would have enjoyed in a normal criminal investigation. Indeed in the 1990s a proliferation of taxpayer charters has underscored the need for greater taxpayer protection in the domestic context. ⁽¹⁰²⁾
 

        1    Need for International Provisions on Taxpayers Rights

87    While the OECD has endorsed a clear statement of taxpayers' rights and accompanying protection and said it will be positive in terms of improving taxpayers' collective levels of compliance and providing a mechanism for limiting even more powerful tax administration, it has not yet set forth an international statement of taxpayers' collective rights. There needs to be a separate statement of taxpayers' right in addition to statements of basic human rights, especially insofar as they relate to international tax cooperation. ⁽¹⁰³⁾

88    A gap is the absence of a generalized legal instrument containing the taxpayers' rights that are universally recognized. In the absence of such a treaty, no process exists whereby standard-setting occurs by which generalized statements in an international covenant on taxpayers' rights could be made more concrete based on the experience and expertise in particular countries. ⁽¹⁰⁴⁾

89    Some countries protect taxpayers in the constitution through general provisions and even safeguards specific to tax, in legislation governing the tax administration, and/or in a taxpayers' charter. For instance, the U.S. has enacted three taxpayer bill of rights in 1988, 1996 and 1998. The U.K., Hong Kong, India and Canada have also enacted taxpayer bill of rights. The mechanisms for protecting taxpayers include the courts, an ombudsman or a specific taxpayer advocate or adjudicator. ⁽¹⁰⁵⁾
 

        2    Current Taxpayer Rights in Bilateral Tax Treaties

90    Bilateral conventions on double taxation and exchange of information contain some protections of taxpayers. In particular, Article 26 of the OECD Model providing for the exchange of information between the revenue authorities of the two states concerned, has the following taxpayer protections:

"1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes [covered by the Convention]. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy [order publique]."

        3    Examples of Challenges to Exchange of Information on Human Rights Grounds

92    Once the Tax Convention is implemented, challenges are likely to focus on possible violations of international human rights laws. 

93    On May 18, 2001, the Supreme Court of Bermuda denied a U.S. request for exchange of tax information in a celebrated case because of the taxpayers involved and the involvement of the interaction of the Convention with the attorney-client privilege. ⁽¹⁰⁶⁾ The court held that the breach of legal professional privilege required Bermuda to deny the request for tax information by the U.S.

94    The fatally defective factual element arose from the fact that the tax investigation started from unlawful taking and communication by two former employees of G.B. Data Systems of privileged and confidential correspondence between law firms and U.S. persons involved in the tax controversy and their use by the U.S. Attorney, which the Bermudian Court noted constitutes a breach of legal professional privilege. ⁽¹⁰⁷⁾

95    The Court ruled that the fact that any material used by or relied on by the U.S. in requesting information under the Act was obtained by persons in breach of confidence and/or privilege makes the request fatally defective and invalidates the Minister of Finance's decision to issue a notice to deliver up information. ⁽¹⁰⁸⁾

96    The Court explained its function "is to examine the decision to implement the request to see if it was taken in compliance with the relevant laws". ⁽¹⁰⁹⁾

97    The Court reasoned that legal professional privilege is protected under the right to a "fair hearing" in sec. 6(1) of the Constitution. In this regard, the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953), which applies to Bermuda and the U.N.'s Universal Declaration of Human Rights 1968, and the form of Chapter 1 itself in the Constitution require a generous interpretation to give to individuals "the full measure of the fundamental rights and freedoms." The Court ruled that "legal professional privilege is a fundamental human right protected by the European Convention for the Protection of Human Rights and Fundamental Freedoms which applies to Bermuda, that it is much more than an ordinary rule of evidence, that it is a fundamental condition on which the administration of justice as a whole rests and that it forms part of the constitutional right to a fair trial and as such cannot be abridged by statute. I further rule that an incident of a person's constitutional right to a fair trial includes a right to legal professional privilege." ⁽¹¹⁰⁾
 

        4    Other Expressions of Human Rights Concerns

98    For example, the Government of Malta has alleged that the basic provisions of the Convention have not been examined for the compatibility with the fundamental principles of human rights laws. ⁽¹¹¹⁾ The Maltese Government has requested that the draft should have been referred to the Council of Europe's Committee of Experts on Human Rights. Malta has focused on the Tax Convention's lack of any reference to the human rights standards that must be respected by member states of the Council of Europe. Applicable rights under the European Convention for the Protection of Human Rights and Fundamental Freedoms (Human Rights Convention) ⁽¹¹²⁾ that may apply are included in the guarantee of a fair and public hearing by an independent and impartial tribunal. ⁽¹¹³⁾

99    To understand the cases that will challenge the Tax Convention under the Human Rights Convention requires a review of the basic guarantees of the Human Rights Convention. The European Court of Human Rights has held that Article I of Protocol Number 1 ⁽¹¹⁴⁾ to the European Convention of Human Rights contains three distinct rules: (1) the principle of peaceful enjoyment of property; (2) governmental depreciation of private possessions is subject to certain conditions; and (3) states are entitled to control the use of property by enforcing such laws as they believe necessary to serve the general interest.

100    The first rule from Protocol 1 mandates a fair balance between the protection of an individual's right to property and the needs of the community. ⁽¹¹⁵⁾ An otherwise legitimate taking of property violates Article 1 if the effect on individual rights is unreasonably disproportionate to the asserted public interest objectives. The Human Rights Court has treated the right to compensation for interference with property rights as inherent to the right to property. ⁽¹¹⁶⁾

101    The second rule involves a Court determination of whether there was an actual depreciation of property, where Court is empowered to bypass formalities and investigate substance of the case. ⁽¹¹⁷⁾ To make this determination, the Court applies "general principles of international law" which include principles established in general international law concerning the confiscation of the property of foreigners but not concerning the property of a state's own national. ⁽¹¹⁸⁾ The Court and the Commission have yet to specifically explain the third rule from Protocol 1.

102    Several additional cases decided by the Court provide insight regarding the application of these principles in criminal cases. Two cases, Campbell and Fell v. United Kingdom ⁽¹¹⁹⁾andPiersack v. Belgium ⁽¹²⁰⁾ set forth standards established by the European Human Rights Commission and the European Court of Human Rights requiring judicial independence and impartiality in criminal matters. The procedures used to gather information in Marc Rich ⁽¹²¹⁾ a major case involving novel issues to international tax law arguably violated the standards set forth in Piersack v. Belgium. Specifically, one can argue that the independence and impartiality of the tribunal were tainted, and that the evidence gathering process used by the tribunal was unfair. For example, the process by which the court issued grand jury subpoenas evidenced a lack of independence from the prosecutor. ⁽¹²²⁾

103    The rights guaranteed by the Human Rights Convention may be asserted by taxpayers seeking to avoid the coverage of the Tax Convention. Article 6 of the Human Rights Convention guarantees a fair hearing, a guarantee that in some ways limits administrative and judicial measures to fight economic crime. Although the Court has yet to construe the general meaning of Article 6, it has applied the fair hearing guarantee to at least one economic case. In Colozza v. Italy ⁽¹²³⁾ the applicant contended that his Article 6 guarantees of a fair hearing were violated when an Italian court tried and convicted him of various offenses of which he was never made aware by the authorities. The Court found a breach of the fair hearing rights guaranteed in Article 6 and held that an accused cannot be presumed to have waived his Article 6 rights where he was not notified of the proceedings against him and attempts to trace him were inadequate. In addition, the court found that lack of notice would make it difficult to exercise other guaranteed rights, such as the right to defend oneself, examine witnesses, and secure the free assistance of an interpreter.

104    The challenge by the Maltese government to the Tax Convention raises the specter of incompatibility between international criminal law and international human rights law. One impending issue is thus whether Tax Convention should embrace -- expressly, or in legislative history -- rights enumerated in the Human Rights Convention. At present there is marked absence of well-defined concepts in international law upon which a comprehensive framework for the development and enforcement of any of these branches can be based. ⁽¹²⁴⁾ However, as internationally protected human rights become classified and defined, either in terms of the values sought to be preserved or their enforcement modalities, the interaction of the various parts will become more pronounced. ⁽¹²⁵⁾

105    Disputes will also arise from the evidence obtained or procedures taken under the Tax Convention which violate the Human Rights Convention. Presumably, affected individuals will be able to use the Human Rights Convention as protection against many adverse consequences. For example, if the violation of the Human Rights Convention are intentional, then deprivations of individual human rights by tax officials could result in criminal penalties against enforcement officials, just as U.S. law penalizes officials who violate confidentiality requirements related to tax information. ⁽¹²⁶⁾ Although this author is not aware of precedents under the Treaty of Rome, an analogous body of law is developing for violations of other business laws. ⁽¹²⁷⁾

106    Because the European Convention on Human Rights applies to some British dependencies that have important international financial sectors (i.e., Bermuda and the Cayman Islands), the Convention's jurisprudence assumes significant breadth. An analogous trend in which tension between the application of international criminal law and international human rights law has been in the holding of the Soering case in the European Court of Human Rights and the Short case by the Dutch Supreme Court that international human rights conventions have precedence over extradition conventions and can block regimes for extradition.

107    As mentioned above, when the U.S. was considering ratifying the Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, the Treasury Department promised it would issue regulations providing for notice to taxpayers when the U.S. received requests and the opportunity to participate in such requests. It promised to consider extending the same regulations to all requests for tax information. However, Treasury has not followed up and would be well advised to implement this promise before it embarks on new enforcement initiatives.
 

    B    Mutual Legal Assistance in Criminal Matters

108    Similarly, practice policing vis-a-vis transnational crime has produced transformations in international criminal cooperation law in the U.S. ⁽¹²⁸⁾ Globalization ensures that the number of transnational criminal investigations and prosecutions involving the U.S. will increase. Undoubtedly an increasing number of cases will bring into play the potential applicability of the various rights guaranteed by the U.S. Bill of Rights and/or applicable provisions of international human rights conventions, such as the International Civil and Political Covenant. ⁽¹²⁹⁾ The tension between the need for the U.S. to cooperate more with national governments and international tribunals and the concern for the fulfillment of constitutional and international human rights standards is likely to continue to build. As mentioned above, some OECD countries have insisted that cooperation in criminal tax matters be done only through MLATs. Hence, it becomes important to consider rights of individuals in the context of MLATs.

109    Recent U.S. mutual assistance treaties in criminal matters that grant the government compulsory process rights, as delimited by the respective treaties, expressly state that the treaties do not create a right for a "private person" to obtain evidence. The purpose is to prevent its MLATs from being used to suppress or exclude evidence or to impede its investigations. Hence, if an adversely affected person wants to prevent the execution of a request which s/he believes was made in violation of the treaty, his or her only recourse under the treaty is to the executive authority of the requested country, not to its courts. Similarly, if s/he wants to contest that the requested country violated the terms of the treaty in executing a request s/he may do so only to the executive authorities of the respective countries. 

110    The treaty provisions do not prevent a person adversely affected by a request or its execution from asserting whatever rights s/he has under the laws of the appropriate country in its courts. For instance, a person whose home or place of business was searched and whose property was seized under a search warrant issued pursuant to a treaty request, may assert whatever rights s/he has under the laws of the requested country to prevent that property from being turned over to the requesting country. Similarly, a person whose records have been subpoenaed pursuant to a treaty request may assert whatever rights s/he has, under the laws of the requested country, to prevent the production of those records and/or their transmittal to the requesting country. An affected person would also presumably be able to seek to enjoin the requested country from taking an action not authorized by the treaty or its laws. ⁽¹³⁰⁾

111    In at least one case in which a defendant sought to use a U.S. mutual assistance treaty in criminal matters to obtain evidence from a U.S. treaty partner pursuant to a treaty which was silent with respect to a defendant's right to seek evidence under it, the trial court directed the Department of Justice to make a treaty request on behalf of the defendant. ⁽¹³¹⁾

112    In a recent case in which I was involved, the defendants were able to persuade the U.S. court to order the U.S. Government to allow the defendants to make use of a U.S. MLAT. In particular, the court ordered that the defense counsel and U.S. Government agree on a procedure to allow defense counsel to utilize the applicable MLAT for a series of witnesses whose depositions abroad were required and for other evidence gathering. If the defense counsel and the U.S. Government could not reach agreement, the court indicated it would set a hearing and make rulings. The court expressed sympathy to the need for defense counsel to proactively use the MLAT. Defense counsel and the U.S. Government did reach accommodation on the procedure. However, when it came to implementation, defense counsel were able to obtain a much more favorable plea offer and eventually a plea agreement was achieved. ⁽¹³²⁾

113    The potential for abuses of privacy and human rights is magnified in the context of the proposed exchanges of suspicious activity reports (SARs) which banks and financial institutions must make. Some countries, such as the U.S., take the position that, once exchanged, they have the right to keep and use such reports indefinitely. The European Union takes the position that, if no enforcement action is taken within three or five years, the information must be destroyed in order to safeguard privacy rights. The problem is exacerbated by the entry into the SAR business of hundreds of new jurisdictions whose banks and financial institutions and Financial Intelligence Units are not highly trained or sophisticated when it comes to financial investigations. Ironically, many of these jurisdictions made their mark on guaranteeing privacy.
 

VI    SUMMARY AND CONCLUSION

114    Increasingly intergovernmental organizations and groups, such as the OECD and FATF, have become self-elected rule-makers. In fact, the FATF is not even an organization, just an informal group. Even though the soft laws are not endorsed by legislatures, the standards, codes of conduct, recommendations, and guidance contained in soft measures can create peer group pressure on individuals and organizations to conform and provide a point of reference for negotiating settlements of disputes. ⁽¹³³⁾

115    Observers have distinguished among the various rules that provide guidelines for actions. Rules can be divided into three broad categories: front-door laws enacted by Parliament; rules enacted under authority delegated by an Act of Parliament; and rules made by self-selected organizations without direct or indirect authorization by Parliament.

116    A rule is a law in the traditional sense if it is introduced through the front door of Parliament and becomes law through a democratic process. International treaties that require approval by an affirmative vote in Parliament are a special form of front door legislation.

117    Delegated regulations, whereby the legislature delegates authority to make regulations to an executive department or to an administrative agency with special responsibilities, illustrate the making of laws through the side door. Some international agreements, such as the Treaty of Rome, shift authority to make rules above the heads of national legislatures. Problems of accountability may be exacerbated in intergovernmental agencies such as the IMF. IMF staff are supervised by a governing board representing groups of countries. While national Ministry of Finance officials liaise with IMF staff, the amount of accountability is questionable.

118    Rules are made through the back door when they lack the direct or delegated authority of an Act or Parliament. In a modern society, every large organization has self-selected rules, some in its charter of incorporation or by-laws and others in codes of conduct and standards, intended to promote efficiency and consistency in its work.

119    The paper distinguishes between hard and soft enforcement. Hard enforcement occurs when courts and related agencies can decide specific disputes arising under a law, interpret laws, and can even declare a law as in violation of the constitution. Courts give individuals aggrieved by governmental actions the opportunity to challenge what government does, and judicial rules are intended to ensure due process, that is, a fair consideration of the claims and counter-claims of all participants in a legal dispute. Some international organizations, such as the EU, can enforce rules through the courts. Other international organizations must enforce through conditions attached to its loans, such as the right to suspend loan payments if a national government does not deliver policies that are a condition of the loan. 

120    International organizations also use soft enforcement, such as expertise, hortatory declarations and moral suasion to promote rules for which no hard means exist to secure compliance. 

121    Increasingly intergovernmental organizations are trying to expand their power by turning soft unofficial standards into hard laws. ⁽¹³⁴⁾ An example is the OECD Fiscal Affairs Committee's harmful tax practices initiative. The OECD's Fiscal Affairs Committee (FAC) is composed of civil servants representing national fiscal and revenue authorities. Ministers in charge of fiscal affairs ultimately endorse its recommendations, but do not scrutinize it as a parliament could. The process whereby the OECD FAC classified certain jurisdictions as tax havens occurred without consultation with national parliaments, political consultation or due process (i.e., in obtaining and assessing evidence and/or allowing the targeted countries to participate fully). The OECD Harmful Tax Competition process illustrates the attempted creation of laws without the scrutiny to which national laws are subject, the absence of any means whereby the targeted countries can participate meaningfully in the application of the laws. In addition, the OECD HTC process is designed to apply sanctions to small non-signatory states without any right of appeal to a tribunal on findings of fact or interpretation. ⁽¹³⁵⁾

122    The OECD HTC initiative and the FATF initiative against non-cooperative countries suffer from the problem of opaque adoption procedures. The initiatives do not have the transparency and democratic processes a legislature uses in enacting bills. The means by which an act of a legislature is adopted may be complex and time-consuming. The lengthy procedures ensure that bills are open to scrutiny by many groups at several stages of the legislative process. The greater the controversy, the greater the publicity and public scrutiny. The rules and processes of intergovernmental organizations, such as the OECD, are less open and their sources are foreign. The remedy is more openness. First, the process should be open from the start of the law-making to all affected states. If that is not possible, then, another intergovernmental of more universal membership, such as the U.N., should undertake the task.

123    Public notification of draft rules is another step in achieving openness. Inviting and also considering comments and objections to the draft is an important aspect. Another element is notifying the jurisdictions of proposed rules. Affected persons that believe a draft rule does not adequately take their interests into account can then address elected representatives to advance their objections. Openness does not guarantee consensus. The drafting of rules is inherently a political process. In a democratic political system persons who make objections will sometimes win and sometimes lose in open political debate.

124    In the end the legitimacy and self-sustainability of international enforcement and particularly tax information exchange mechanisms will depend on the extent of democracy in their elaboration and implementation and whether taxpayers and other affected groups perceive them as having sufficiently fair procedures. The mechanisms most clearly at issue in the context of tax information exchange mechanisms are those providing that signatories may provide notice to taxpayers and an opportunity to participate (e.g., object in whole or part to a request) in the process. Jurisdictions wanting to maintain or establish a business and human rights friendly investment environment will develop the mechanisms that provide the fairness that their governments so often claim or require of other countries. 
 

NOTES

1. For background on the hearing see Bruce Zagaris, U.S. Congress Holds Hearing on U.S. Position on Offshore Tax Havens, 17 Int'l Enforcement L. Rep. 364 (Sept. 2001).
2. For the reconstitution document, see OECD, Convention on the Organization for Economic Cooperation and Development, Dec. 14, 1960.
3. Id., Art. 1.
4. Id., Art. 2.
5. Id., Art. 3.
6. Id., Art. 5.
7. Id., Art. 6(2).
8. Id., Art. 6(3).
9. Id., Art. 7.
10. Id., Art. 9.
11. Id., Art. 12.
12. For a text of his statement see Paul O'Neill, Confronting OECD's Notions on Taxation, The Washington Times, May 10, 2001, website (www.washtimes.com); Bureau of National Affairs (BNA) Tax Core.
13. Id.
14. For background on the U.S. partial withdrawal, see Bruce Zagaris, U.S. Announcement of Partial Withdrawal from Harmful Tax Initiative Creates Uncertainties, 17 Int'l Enforcement L. Rep. 284 (July 2001).
15. Michael M. Phillips, Accord Is Reached By U.S. and Allies on Tax Havens, Wall St. J., June 28, 2001, at A11, col. 1.
16. For additional information, see Bruce Zagaris, OECD Reaches Compromise in Principle on Harmful Tax Practices, 17 Int'l Enforcement L. Rep. 332 (Aug. 2001).
17. This section is adopted from the article by Bruce Zagaris, Initiatives by OECD, Financial Action Task Force on Money Laundering at Critical Junctures, 23 Tax Notes Int'l 3087 (June 18, 2001).
18. OECD Framework for a Collective Memorandum of Understanding on Eliminating Harmful Tax Practices, OECD Web site (http://www.oecd.org).
19. Committee on Fiscal Affairs, OECD, Improving Access to Bank Information for Tax Purposes (declassified 24 Mar. 2000).
20. Stephen S. Heller/Boris Stein, Canada, International Mutual Assistance Through Exchange of Information, LXXVb Cahiers de Droit Fiscal Int'l 259, 265 (1990).
21. For additional discussion of the problems with exchange of information, see Richard J. Hay, Offshore Financial Centres: The Supranational Initiatives, Tax Planning Int'l Rev. 1, 5 (Feb. 2001).
22. See Bruce Zagaris, Developments in Mutual Cooperation, Coordination and Assistance Between the U.S. and Other Countries in International Tax Enforcement, 27 Tax Mgmt. Int'l J. 506, 508-9 (Oct. 9., 1998); Luxembourg and U.S. Conclude Tax Treaty Whose Ratification Process Awaits Conclusion of a MLAT, Int'l Enforcement L. Rep. 171 (May 1996).
23. For a discussion of the transparency issues, see Bruce Zagaris, Application of OECD Tax Haven Criteria to Member States Shows Potential Danger to U.S. Sovereignty, Tax Notes Int'l 2298, 2299-2301 (May 7, 2001); Zagaris, Issues Low-Tax Regimes Should Raise When Negotiating with the OECD, Tax Notes Int'l 523, 529-30 (Jan. 29, 2001).
24. For the text and a brief discussion of the Convention, see 28 I.L.M. 1160 (1988); 3 Rhoades & Langer, Income Taxation of Foreign Related Transactions, COUN §8.00[2]. It can also be found on the Council of Europe website.
25. For a current list of the signatories and ratifications, see the Council of Europe website, http://conventions.coe.int/Treaty (accessed Aug. 7, 2001).
26. See Committee on Fiscal Affairs, OECD, Explanatory Report and Commentary on the Provisions of the Convention, Commentary on para. 1 (May 27, 1986).
27. Bruce Zagaris, Governments Take Divergent Paths on OECD Convention on Administrative Assistance in Tax Matters, 5 Int'l Enforcement L. Rep. 8 (Jan. 1989)
28. Id., Art 1.
29. Id., Art. 28(2).
30. Id., Art. 8-9.
31. Id., Art. 4(1).
32. Id., Art. 4(2).
33. Id., Art. 1(3).
34. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 51.
35. Id., para. 54.
36. CoE/OECD Mutual Administ. Assistance Convention, Art. 4(3).
37. Report of the Senate Committee on Foreign Relations on the OECD Convention on Mutual Administrative Assistance in Tax Matters, Exec. Rept. 101-26, 101^st Cong., 2^nd Sess., 1990.
38. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 57.
39. CoE/OECD Mutual Administ. Assistance Convention, Art. 5(1).
40. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 59.
41. Report of the Senate Committee on Foreign Relations on the OECD Convention on Mutual Administrative Assistance in Tax Matters, Exec. Rept. 101-26, 10st Cong., 2nd Sess,
42. CoE/OECD Mutual Administ. Assistance Convention, Art. 6.
43. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 63.
44. Id.
45. Id. at 67.
46. CoE/OECD Mutual Administ. Assistance Convention, Art 7(1).
47. Id., Art. 7(2).
48. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 70.
49. Id., Art. 8(1).
50. Id., Art. 8(2).
51. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, paras. 82-83.
52. Id. at para. 83.
53. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, paras. 85-88.
54. CoE/OECD Mutual Administ. Assistance Convention, Art. 9(1).
55. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, paras. 91-92.
56. Id., Art. 9(2).
57. Id., Art. 9(3).
58. Id., Art. 17(1).
59. Id., Art. 17(3).
60. Id., Art. 17(2).
61. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, paras. 165-66.
62. CoE/OECD Mutual Administ. Assistance Convention, Art. 18(1).
63. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 169.
64. Id., Art. 18(2).
65. Id., Art. 19.
66. Id., Art. 20(1).
67. Id., Art. 20(2).
68. Id., Art. 20(3).
69. Id., Art. 21(1).
70. Id. Art. 21(2).
71. OECD Committee on Fiscal Affairs, Explanatory Report on the Convention on Mutual Administrative Assistance in Tax Matters, para. 191.
72. Id. at para. 200.
73. Id. at para. 201.
74. CoE/OECD Mutual Administ. Assistance Convention, Art. 22(1).
75. Id., Art. 22(2).
76. Id., Art. 22(3).
77. Id., Art. 22(4).
78. Id., Art. 23(1).
79. Id., Art. 23(2).
80. Id., Art. 23(3).
81. Id., Art. 24(1).
82. Id., Art. 24(2).
83. Id., Art. 24(3).
84. Id., Art. 24(4).
85. Id., Art. 24(5).
86. Id., Art. 27(1).
87. Id., Art. 29.
88. OECD Convention for Mutual Assistance Opens for Signature, 4 Int'l Enforcement L. Rep. 9 (Jan. 1987) [recte: reflecting notably the international business community's fundamental and ardent opposition to this so-called INTERFIPOL Convention, it was officially opened for signature in Strassbourg only on 25 January 1988].
89. Bruce Zagaris, IRS Contemplates Taxpayer Rights Under OECD Assistance Convention, 4 Int'l Enforcement L. Rep. 158 (May 1988).
90. Id.
91. See International Chamber of Commerce Seeks to Re-Open Debate on Multilateral Tax Accord, BNA Daily Tax Rep. No. 189 at G-3 (Oct. 1, 1987) (reporting the ICC member organizations have lobbied against the Tax Convention for several years.) The American Bar Association has also argued that individual taxpayers should be notified regarding requests for information under the Convention. See Practitioners Call for Protection of Taxpayer Rights Under OECD Treaty, BNA Daily Tax Rep. No. 194 (Oct. 6, 1988).
92. Id. The ICC also argued that the Tax Convention is superfluous in light of existing treaties and that the Convention "lacks clear standards for information." Id. See also B. Zagaris, OECD Convention on Mutual Assistance Opened for Signature While ICC and Others Oppose Its Ratification, 3 International Enforcement Law Rep. 337, 338 (1987) (reporting on ICC objections). See also "European Taxmen Plot an Orwellian Scheme", Wall St. J., (Europe edition), May 9, 1986. The Business and Industry Advisory Committee opposed the Tax Convention on the ground that it would increase the risk that taxpayer confidentiality might be compromised -- "without the knowledge of affected taxpayers." International Chamber of Commerce Seeks to Re-Open Debate on Multilateral Tax Accord, supra . However, policy representatives of the Treasury Department have indicated strong support for the Convention, and have alleged that such exchanges of taxpayer information proceed with "extreme sensitivity." See Multilateral Treaty Includes Adequate Confidentiality Provisions, Treasury Official States, BNA Daily Tax Rep. No. 90 at G-4 (May 12, 1987).
93. E.g., Switzerland, Luxembourg, and Portugal. See OECD Opens Information Exchange Convention to Signature by U.S. and Other Countries, BNA Daily Tax Rep. No. 195 at G-2 (Oct. 9, 1987) [hereinafter OECD Open Convention]. Austria, Australia, FRG, and the UK publicly declined to decide whether to sign when the Convention was first opened for signature. Id.
94. Bruce Zagaris, Fisher States that U.S. Expected to Sign Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, 5 Int'l Enforcement L. Rep. 179, 179-80 (May 1989).
95. Bruce Zagaris, Springer Briefs Committee on International Tax Developments, 5 Int'l Enforcement L. Rep. 182, 182-83 (May 1989).
96. Bruce Zagaris, Sen. Helms' Inquiries over Individual Rights in MLATs Delay Mark-Up, 4 Int'l Enforcement L. Rep. 160 (May 1988).
97. Bruce Zagaris, Fisher States that U.S. Expected to Sign Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters, supra.; Exchange of Information: Government Decides Not to Sign, The Tax Journal 2 (Jan. 12, 1989).
98. Bruce Zagaris, Governments Take Divergent Paths on OECD Convention on Administrative Assistance in Tax Matters, 5 Int'l Enforcement L. Rep. 8 (Jan. 1989).
99. Id.
100. Report of the Senate Committee on Foreign Relations on the OECD Convention on Mutual Administrative Assistance in Tax Matters, Exec. Rept. 101-26, 101^st Cong., 2^nd Sess., 1990.
101. This section is adopted from the last part of Zagaris, Initiatives by OECD, Financial Action Task Force on Money Laundering at Critical Junctures, supra.
102. Philip Baker and Anne-Mieke Groenhagen, The Protection of Taxpayers Rights An International Codification (European Financial Forum, London, April 2001).
103. Id. at 4-5.
104. Id. at 34.
105. Id. at 8-20.
106. In the Matter of the Administration of Justice (Prerogative Writs) Act 1978 and in the Matter of the U.S.A.-Bermuda Tax Convention Act, 1986 and In the Matter of an Application by Almon Glen Braswell, Gero Vita International, Inc. and G.B. Data Systems Inc. (hereafter Braswell), In the Supreme Court of Bermuda, Civil Jurisdiction No. 59 of 2000, May 18, 2001.
107. Id. at 5-6.
108. Id. at 15.
109. Id., citing Bermuda Trust Company Limited Co. Ltd. & Others v. Minister of Finance, Ground J., 17 May 1996, at 8.
110. Braswell, supra, at 16. For additional background, see Bruce Zagaris, Bermuda Court Denies U.S. Tax Information Exchange Due to Attorney-Client Privilege, 17 Int'l Enforcement L. Rep. 362 (Set. 2001).
111. See International Chamber of Commerce Seeks to Re-Open Debate on Multilateral Tax Accord, supra at G-3 (reporting Malta's objection).
112. European Convention for the Protection of Human Rights and [Fundamental Freedoms, opened for signature Nov. 4, 1950, 213 U.N.T.S. 221 (hereinafter Human Rights Convention)]. For a useful discussion of some of the issues in applying the European and other international human rights conventions to international asset forfeiture issues, see R. Wilson, Human Rights and Money Laundering: The Prospect of International Seizure of Defense Attorney Fees, in INTERNATIONAL HUMAN RIGHTS AND INTERNATIONAL CRIMINAL LAW 1-25 (ABA Criminal Just. Sec., Aug. 13, 1991).
113. The Human Rights Convention provides that "in the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law." Id., Art. 6(1), 213 U.N.T.S. at 228.
114. Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of state to enforce such laws as it deems necessary to control the use of property in accordance with the general inte