Abstract

In a recent decision, United States v. Harden, the Canadian Supreme Court adhered to the oft-criticized rule that the courts of one nation will not take notice of nor enforce the revenue laws of another, whether the suit brought arises in the form of a claim for taxes or a judgment rendered thereon. In the instant case, the claim had been adjudicated in the United States District Court for the Southern District of California, and the adjudged assessment had been arrived at by a stipulation between the appellant and the appellee. Subsequently, the appellee had removed her domicile to Canada, and was a resident of the Province of British Columbia at the time litigation began in the Canadian courts. In refusing to entertain the appellant's action, the Canadian court upheld a rule, the history of which dates back to a later Eighteenth Century expression of dictum2, and the force of which appears to have been largely sustained by judicial tradition rather than by reasoned policy considerations. The rule has often been articulated in matters not involving questions of extraterritorial enforcement of tax assessments, and where it has been applied in the tax enforcement context, there has generally been a paucity of judicial analysis as to the rationale therefor.

This rule of non-enforcement has been the subject of frequent criticism, most recently in the aftermath of the House of Lords' disposition of Government of India v. Taylor, but the criticisms advanced have not borne fruit. The only exceptions to the rule appear to have arisen in conjunction with treaty provisions to that effect, or in the interstate context, as regards the question and the resolution thereof between the various American states. In view of the Canadian court's recent disposition upon the basis of the rule, an analysis and evaluation appears timely. Such an endeavor is attempted in the following pages.

The first section of the article is directed to a chronological review of the history of the rule in the courts of England and the United States, respectively. These two jurisdictions have been selected because of the absence of available information upon the position of other jurisdictions. The second section is directed to an analysis and evaluation of the various rationale which have been advanced in support of the rule. The third section is concerned with a survey of those treaty provisions which have been designed to circumvent the operative effect of the rule. The final section contains the writer's conclusions upon the subject.

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