Retroactivity in legislation: Validation Statutes and Interpretative StatutesArguments in favour

Bruno Peeters EATLP Leuven 28 May 2010

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General Thesis«  Retroactive tax legislation introduced to

confirm a legal interpretation or validate a certain practice of the tax authorities is not acceptable, especially in case of back-dating to a moment prior to the date of first announcement »

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I. Arguments in favour of interpretative statutes1. Ejus est interpretari legem cujus est condere:

General principle of law: only the author of the law can provide an authentic interpretation binding for all citizens

E.g. Art. 85 Belgian Constitution and Art. 7 Belgian Judicial Code

Comp.: - Luxembourg; Greece, Italy, Spain, UK- Denmark, Finland, Germany, Hungary, the Netherlands,

Poland, Sweden, Turkey and US.

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I. Arguments in favour of interpretative statutes2. The retroactive effect of interpretative

statutes is justified because it does not violate the principle of legal certainty

Interpretative statutes do not change the consequences of facts

Interpretative statutes are supposed not to bring any new in the interpreted statute.

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I. Arguments in favour of interpretative statutes3. An interpretative statute has a clarifying

function. In view of the general principle of good lawmaking this method is justified.

An interpretative statute attributes to a legal provision the meaning the legislator had in mind at the time of its adoption

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I. Arguments in favour of interpretative statutes4. Abuse of interpretative legislation can be prevented- Rejection of a mere formal approach- Substance over form: interpretative statutes vs. pure

retroactive statutesJudicial control by a Constitutional Court

- « An interpretative statute is a legal provision that – in view of the unclear wording of another statute – gives an interpretation, to the latter statute, the legislator wanted to give since its adoption and which can reasonably be justified»

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I. Arguments in favour of interpretative statutes5. Interpretative statutes can prevent abuses

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I. Arguments in favour of interpretative statutes6. The so-called retroactive effect of

interpretative tax statutes can also have non fiscal aims in favour of taxpayers

E.g. Art. 12-14 Belgian Bill of 21 December 2009So-called ‘retroactive effect’ of the interpretative

statute was accepted by the European authorities

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II. Arguments in favour of validation statutesA. Preliminary remarks on the used

terminologya. Definition of a validation statute« A validation statute is a technique which

enables Parliament to promote or even impose the application of an unilateral administrative act, notwithstanding its potential or claimed irregularity »

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II. Arguments in favour of validation statutesA. Preliminary remarks on the used terminology:b. Several types of validation statutes (s.l.) exists:- Statutes validating an existing illegal administrative

act (s.s.)- Statutes legalizing an existing illegal administrative

act- Statutes ratifying an existing administrative act- Partial or total validation- Validation ex ante or ex post (see more infra)- Validation with or without specific conditions (see

more infra)

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II. Arguments in favour of validation statutesA. Preliminary remarks on the used terminology:c. Consoldation of irregularities: difference between

‘validation’ and ‘regularization’- Regularization is at hand when one corrects the

irregularity of the act (f.i. The remake of the administrative act by the administrative authority itself).

- When validating the irregularity of an administrative act there is no correction of the act itself’.

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II. Arguments in favour of validation statutesA. Preliminary remarks on the used

terminology:d. Difference between a validation statute and

an interpretative statuteInterprative statutes confirm the interpretation

the legislator had in mind at the time of the adoption of the interpreted legal provision

Validation statutes validate retroactively irregular administrative acts

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II. Arguments in favour of validation statutesA. Preliminary remarks on the used

terminologye. Distinction between a posteriori and a priori

validation statutesValidation before or after the irregularity has

been determined by the courts

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II. Arguments in favour of validation statutesB. Justification of validation statutes

a. S.S.S. (Simplicity, Security and Supremacy)

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II. Arguments in favour of validation statutesB. Justification of validation statutesb. Validation statutes are only justified in

exceptional circumstances or when compelling motives of general interest are at hand 1) When validation statutes contain conditions in order to guarantee the respect of the fundamental rights of individuals they do not seem problematic.

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II. Arguments in favour of validation statutesB. Justification of validation statutes

b. Validation statutes are only justified in exceptional circumstances or when compelling motives of general interest are at hand

2) The balance between the respect of the alleged fundamental rights of individuals on the one hand and the exceptional circumstances or compelling motives of general interest on the other hand, has to be judged in concreto.

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II. Arguments in favour of validation statutesB. Justification of validation statutes

Legal motives for validation statutes are for instance:

• The retroactive regularisation of a technicality when the administrative authority is not in the legal position to correct this shortcoming itself ;

• The validation of an administrative act that was nullified by an administrative court when the motives of the nullification are respected. In this respect by validating the nullified act, the legislator restores the equal treatment of all citizens concerned (e.g. taxpayers).

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II. Arguments in favour of validation statutesB. Justification of validation statutes

Legal motives for validation statutes are for instance:

• Validation is also possible even with retroactive effect, when no vested rights are violated and the retroactive effect is necessary – in view of the severe financial consequences - to guarantee/restore the continuity of public service;

• Validation statutes are also possible in order to prevent severe financial and administrative difficulties which could distort the well-functioning or continuation of public service.

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II. Arguments in favour of validation statutesB. Justification of validation statutes

Legal motives for validation statutes are for instance:

• Validation statutes can also been justified in order to make an end to an uncertainty caused by several opposite court decisions;

• Validation statutes are also conceivable when the legislator is of the opinion that he has to exercise a certain competence itself because a delegation of this competence to certain administrative authorities is or could be subject to discussion (before the courts);

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II. Arguments in favour of validation statutesB. Justification of validation statutesLegal motives for validation statutes are for

instance:• Validation statutes with retroactive effect can

eventually have an influence on the outcome of pending legal proceedings or prevent courts to handle certain issues. Normally this retroactive effect is not admissible, unless exceptional circumstances or compelling motives of public interest justify the retroactive effect; this could be f.i. the case when the legislator intends to neutralise a Supreme Court’s decision accepting an overall not attended new interpretation of a certain administrative act and with a very negative financial impact for the Treasury;

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II. Arguments in favour of validation statutesB. Justification of validation statutes

Legal motives for validation statutes are for instance:

• Validation statutes with retroactive effect are also conceivable when they concern illegal administrative regulations favourable to the taxpayers. (f.i. the validation of a general illegal tax exemption);

• What’s the point with validation statutes in view of judicial control, when validation statutes themselves are subject to judicial control?