''Government of India v Taylor''

955 Year 955 ( CMLV) was a common year starting on Monday (link will display the full calendar) of the Julian calendar. Events By place Europe * August 10 – Battle of Lechfeld: King Otto I ("the Great") defeats the Hungarians (also ...

AC 491 (sometimes called ''Re Delhi Electric Supply & Traction Co Ltd'') is a judicial decision of the

House of Lords The House of Lords, also known as the House of Peers, is the Bicameralism, upper house of the Parliament of the United Kingdom. Membership is by Life peer, appointment, Hereditary peer, heredity or Lords Spiritual, official function. Like the ...

relating to the enforceability of foreign tax claims under

English law English law is the common law legal system of England and Wales, comprising mainly criminal law and civil law, each branch having its own courts and procedures. Principal elements of English law Although the common law has, historically, be ...

. The House of Lords unanimously upheld the general rule at

common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...

that foreign tax claims are non-justiciable in England under the

Act of state doctrine The act-of-state doctrine or federal act of state doctrine is a principle of federal common law in the United States which states, in circumstances where it applies, that courts in the United States will not rule on the validity of another governm ...

. Accordingly, a claim with respect to foreign taxes was not an admissible claim in the

liquidation Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia, New Zealand, Italy, and many other countries. The assets and property of the company are redistrib ...

of a United Kingdom company. The English courts may not, directly or indirectly, enforce the tax claims of another sovereign state.

Facts

The Delhi Electric Supply & Traction Co Ltd was an English company which was formed in 1906. It was incorporated for the purpose of operating an electricity supply and tramway under an operating licence granted by the Municipality of Delhi. The company carried on business in India until approximately 1947 when it sold the whole of its undertakings to the

Government of India The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...

on 2 March 1947. On 18 April 1947 India passed the Indian Income Tax and Excess Profits Tax (Amendment) Act 1947. On 25 May 1949 the company went into

voluntary liquidation Liquidation is the process in accounting by which a company is brought to an end in Canada, United Kingdom, United States, Ireland, Australia, New Zealand, Italy, and many other countries. The assets and property of the company are redistrib ...

. Samuel Taylor and John Lovering were appointed as liquidators, having previously acted as

directors Director may refer to: Literature * ''Director'' (magazine), a British magazine * ''The Director'' (novel), a 1971 novel by Henry Denker * ''The Director'' (play), a 2000 play by Nancy Hasty Music * Director (band), an Irish rock band * ''D ...

of the company. On 24 October 1951 the Commissioner of Income Tax at Delhi served a notice claiming tax on the surplus from the sale of undertaking. The liquidators rejected the claim, and sought directions from the court as to whether the claim was an admissible claim in the liquidation.

Judgment

The case came before Vaisey J at first instance who dismissed the claim. That decision was upheld by the

Court of Appeal A court of appeals, also called a court of appeal, appellate court, appeal court, court of second instance or second instance court, is any court of law that is empowered to hear an appeal of a trial court or other lower tribunal. In much of t ...

(

Lord Evershed MR Francis Raymond Evershed, 1st Baron Evershed, PC (8 August 1899 – 3 October 1966) was a British judge who served as Master of the Rolls, and subsequently became a Law Lord. Background and education Evershed was the son of Frank Evershed, a b ...

, Jenkins LJ and Morris LJ). The Government of India then appealed to the

. The House of Lords held unanimously that the claim failed. Viscount Simonds gave the lead judgment. He summarised the general prohibition at common law, citing various earlier cases on point, including ''King of Hellenes v Broston'' (1923) 16 Ll L Rep 190, ''Re Visser''

928 Year 928 (Roman numerals, CMXXVIII) was a leap year starting on Tuesday (link will display the full calendar) of the Julian calendar. Events By place Europe * King Rudolph of France, Rudolph I loses the support of Herbert II, Count of ...

Ch 877 and ''Sydney Municipal Council v Bull''

909 __NOTOC__ Year 909 ( CMIX) was a common year starting on Sunday (link will display the full calendar) of the Julian calendar. Events By place Britain * King Edward the Elder and his sister, Princess Æthelflæd of Mercia, raid Danish ...

1 KB 7. Having cited the general rule, he then discussed the two alternative grounds upon which counsel for the Government of India was arguing that an exception should be made: * Firstly, that as India was a republic within the

Commonwealth A commonwealth is a traditional English term for a political community founded for the common good. Historically, it has been synonymous with "republic". The noun "commonwealth", meaning "public welfare, general good or advantage", dates from the ...

, recognising the Queen as

Head of the Commonwealth The head of the Commonwealth is the ceremonial leader who symbolises "the free association of independent member nations" of the Commonwealth of Nations, an intergovernmental organisation that currently comprises 56 sovereign states. There is ...

, it should not be treated in the same way as other wholly foreign countries; and * Secondly, that the general rule applied to natural persons and personal claims - neither consideration should apply to a company in winding-up, which is required to make provision for all claims made against it. Viscount Simonds rejected both arguments, describing them as "frail weapons with which to attack a strong fortress". He noted that the general common law had tacit Parliamentary approval in the passing of the

Foreign Judgments (Reciprocal Enforcement) Act 1933 Foreign may refer to: Government * Foreign policy, how a country interacts with other countries * Ministry of Foreign Affairs, in many countries ** Foreign Office, a department of the UK government ** Foreign office and foreign minister * Unit ...

, section 1(2)(b). He ultimately summarily rejected both arguments. Lord Keith gave a short concurring judgment, specifically endorsing the recent judgment in ''Peter Buchanan Ltd v McVey''

954 Year 954 ( CMLIV) was a common year starting on Sunday (link will display the full calendar) of the Julian calendar. Events By place Europe * Spring – A Hungarian army led by Bulcsú crosses the Rhine. He camps at Worms in th ...

Ir 89 (unreported at the time). Lord Somervell also gave a short concurring speech, affirming the general statement of

Lord Mansfield CJ William Murray, 1st Earl of Mansfield, PC, SL (2 March 170520 March 1793) was a British barrister, politician and judge noted for his reform of English law. Born to Scottish nobility, he was educated in Perth, Scotland, before moving to Lond ...

in ''

Holman v Johnson ''Holman v Johnson'' (1775) 1 Cowp 341 is an English contract law case, concerning the principles behind illegal transactions. It is also possibly the first case in English law where the court explicitly recognised that aspects of a claim befor ...

'' (1775) 1 Cowp 341 at 343 that "no country ever takes notice of the revenue laws of another." He then went on to state that "after considerable research no case of any country could be found in which taxes due to State A had been enforced in the courts of State B."

Significance

''Government of India v Taylor'' remains good law today. It forms the central basis of Rule 3 of

Dicey Morris & Collins ''Dicey, Morris & Collins on the Conflict of Laws'' (often simply ''Dicey, Morris & Collins'', or even just ''Dicey & Morris'') is the leading English law textbook on the conflict of laws (). It has been described as the "gold standard" in ter ...

on ''The Conflict of Laws'', and is one of the primary authorities cited in support of that rule: However it has been qualified by subsequent authorities, including by the Privy Council in . In ''QRS 1 Aps v Frandsen''

999 999 or triple nine most often refers to: * 999 (emergency telephone number), a telephone number for the emergency services in several countries * 999 (number), an integer * AD 999, a year * 999 BC, a year Books * ''999'' (anthology) or ''999: T ...

1 WLR 2169 it was held that to uphold a contractual indemnity for the payment of taxes would not constitute indirect enforcement of a foreign tax claim. It has also been noted that in practice the effect of the rule is widely circumvented by international treaties.

Footnotes

{{DEFAULTSORT:Government of India v Taylor English conflict of laws case law House of Lords cases 1955 in British law 1955 in case law

Facts

Judgment

Significance

See also

Footnotes