Is it possible to just copy the text of an international treaty into a bill and enact it as a national law? Does the form of the legal regulation really not matter? There is a very interesting bill under discussion in the Czech Chamber of Deputies concerning double taxation and Taiwan (Document of the Chamber No. 434 – CHoD website). This bill opens, not only so far unanswered legal questions, but also very tricky political dilemma.  

How to conclude an international treaty without really concluding it?

It is quite usual for countries to enter double tax agreements (DTAs) to mitigate double taxation. Such international treaties regulate situations when a resident of one country is supposed to be taxed in another country, but also in his or her own country (very simply put).

The Czech Republic wanted to conclude such double tax agreement with Taiwan, but one problem, and not a minor one, was that the Czech Republic does not recognise Taiwan as a sovereign entity. The Czech Republic, as is the case with the whole of the European Union, follows One China Policy and therefore cannot enter into any international treaty with Taiwan. You simply can’t enter into an agreement with someone, who you pretend does not exist.

The (Czech) government is trying to fix this essential flaw by proposing the matter as a regular bill to parliament with an acknowledgment of a novelty of such a solution.

International treaty or law?

The bill (Document of the Chamber No. 434) is, stricto sensu, a law. However, by its content, structure and used language, it is an international treaty. It is, of course, absolutely normal the states are prescribing the taxes and setting up the whole tax system by their national legislation. The double tax regulation, on the other hand, is a strictly international law matter and the government is declaring it itself in the Explanatory Notes. The procedure of adoption of an international treaty in the parliament (of the Czech Republic) is widely different to the one of bills. The government argues the parliament has much bigger control over the procedure when the content is proposed in the form of a bill, but ignores at the same time that the Senate (the Upper Chamber of the Parliament) is equal to the Chamber of Deputies (the lower Chamber of the Parliament) when discussing international treaties, i.e. the Senate cannot be overruled by the Chamber of Deputies when giving its assent to the ratification of the international treaty by the President of the Republic.

Article 49 of the Czech Constitution clearly prescribes what kind of international treaties must be ratified by both chambers of parliament (e.g. treaties concerning rights and obligations of persons). Is it not thus a circumvention of the Constitution when the regulation which is by its nature a matter of international law and not national law, embodied into the national legislation and formally proposed to the parliament as a bill?

The Czech Republic can, of course, regulate by national legislation the same matter as is usually regulated by international law. However, this time the government essentially copied the international treaty into the bill, breaching the Rules of Procedures of the Government repeatedly. The bill is an international treaty by its structure, uses public international law terminology etc. The government itself recognises this when saying that “(…) the Appendix of the Bill should be interpreted as if it would be a double tax agreement.” (Explanatory Notes, p. 25)

Is it really not possible to solve the problem using standard tools? So far, all treaties between the Czech Republic and Taiwan have been concluded between the Czech economic and culture office in Taipei and Taipei economic and culture office in Prague instead (or similar subjects).[1]

Another problem is from a Czech foreign policy point of view. Article 2/2 of the Appendix recognises Taipei jurisdiction[2] to enact its own laws, collect taxes and establish its own institution to these purposes even through the Czech Republic doesn’t recognise Taiwan as a sovereign entity. The Appendix itself also uses the term “subject” which according to Article 3/1 (letter e, point i) means every natural person who is considered as a citizen of the territory according to the law of such territory.

Czech law regulation competences of Taiwan authorities

The bill is repeatedly vesting powers in different Taiwan authorities or presumes their action which is gravely absurd. The reason is that the bill is working with the usual international law approach of two subjects of international law committing themselves by their mutual consent to act (or not to act) in a prescribed way. Therefore, in this case, the Czech law refers to the Taiwan authorities as if they were subjects to it.

The whole construction of the bill stands upon the idea of reciprocity (Article 27) – institute not known to the national law as the law itself is a unilateral manifestation of the parliament’s will.

Breach of separation of powers – legislature

The Legislative power is, according to Article 15/1 of the Czech Constitution, vested in parliament. This means it is the parliament that enacts the law, but also that the law itself must contain some essential elements in its entirety – especially how the behaviour of subjects shall be regulated (their rights and obligations) and the scope of the law. It is not possible to enact a law which would be only an empty shell to be filled by a government.

The commencement day of the bill is pro forma in § 5 of the bill (15 days after its publication), but de facto is entirely in the hands of Ministry of Finance. The whole content of the law is put in the Appendix (which is against the Rules of Procedures of the Government) which comes into force only after commencement order by the ministry of finance. The scope of the law is then set up by the ministry of finance and not by the parliament itself.

There are other fundamental flaws concerning the commencement of the law.

The § 2 – 4 of the bill talk about “mutual notice about the possibility of using the Appendix” and later in the Article 27 of the Appendix clearly states the use of the Appendix is bound to the reciprocity. The commencement of the national law is therefore dependent on the act of authorities of foreign entity not recognised by the state itself.

This construction of when the law actually comes into force is not only unconstitutional, but also terribly unfortunate. No one may say with certainty when the law comes into force and whether the necessary reciprocity will hold and therefore whether the law will not be brought out of force and later back into again. All of that is at the expense of the legal certainty of the subjects of the law.

Breach of separation of powers – judiciary

The subject or resident of Taiwan may, according to Article 24/1 of the Appendix, in case of the breach of the law by the authorities of the Czech Republic seek justice before the court or other authorities of Taiwan regardless of the Czech legislation. The Constitutionally guaranteed powers of the Czech judiciary are therefore limited. The bill is presenting quite bizarre vision of Taiwanese authorities judging whether the Czech law has been breached or not.

Disregard of the rules of procedures of the government

As I have said before, the whole bill is essentially an international treaty and not a national legislation. It seems like the Government have just written a few beginning articles and then only copy the standard double tax international treaty into the Appendix of the bill. The government completely ignores even the most basic principles of the Rules of Procedures of the Government (RoPoG).

The entire content of the bill in its Appendix:

The Appendix of the Law shall contain only a part of the law, if it is appropriate to increase the clarity of the law, but the core articles shall always be incorporated in the body of the law (see Art. 29/1 of the RoPoG). However, the government has decided to put the entirety of the content into the Appendix and the body of the law to use only as a bearer of the Appendix into the legislation.

Vagueness of the commencement of the law:

According to Article 53/3 of the RoPoG, commencement date shall be determined clearly and unambiguously. Any reference to act of other authorities is not only against current practice, but also against the principle of legal certainty and clarity.

Terminological ambiguity and wrong Appendix structuring:

The government uses in the bill public international law terminology instead of the terminology usual to the national legislation. Also, the structuring is according to the public international law usage disrespecting the RoPoG. Every law (including the Appendices), except of the constitutional one, shall be divided into § (sections), not articles as the Appendix of the Double Tax Bill.

On a final note…

We may easily agree with the reason behind the Double Tax Bill and after all it is quite standard double tax international agreement. Therein lies the problem. The government’s decision to propose the matter as a bill is direly unfortunate, particularly because of:

  • possible circumvention of the Article 49 of the Constitution and breaching the powers of the Senate by proposing de facto international treaty as a bill;
  • powers vested in Taiwanese authorities by Czech Law;
  • breach of the separation of powers by usurping the decision on the commencement by the executive;
  • commencement of the law dependent on act of the authority of a foreign entity;
  • decreasing of the legal certainty by vagueness of the commencement of the law;
  • breaching the powers of the judiciary to protect the rights of the subjects of the law;
  • disregard of the Rules of Procedures of the Government.

The government itself states repeatedly the Bill is in its entirety only a way how to circumvent the impossibility to conclude a standard international treaty and the bill should be treated according to it. However, the bill is not an international treaty and the difference simply cannot be ignored.

One may say it is as broad as it is long… except it isn’t.

[1] E.g. Declaration of Czech economic and cultural office in Taipei and Taipei economic and cultural office in Prague on cooperation in education. (More at https://www.businessinfo.cz/cs/clanky/tchaj-wan-obchodni-a-ekonomicka-spoluprace-s-cr-18116.html#sec5, point 4.5.)

[2] The Government is speaking about Taiwan jurisdiction repeatedly throughout the Explanatory Notes.

Lukáš Lev Červinka, is a constitutional lawyer specialising in the comparative constitutional law and parliamentarism, is currently working as a legal political advisor for MP Jan Lipavský, in the field of international security. He is also a Research Fellow at the AMO (Association for International Affairs) Research Centre. He is a Pirate Party candidate in the European Parliament elections.