Wednesday, December 23, 2015

Interesting Report on U.S. Taxpayer Suit Against Swiss Authorities for UBS Information Turnover (12/23/15; 12/26/15)

Swissinfo reports on a case from the The European Court of Human Rights denying a U.S. person relief for the turnover of information from UBS to the U.S.  Swiss ‘justified’ in giving UBS bank data to US ( 12/22/15), here.   The case itself, apparently available only in French, is here. The result is not surprising.  The reasoning narrated in the article is surprising -- not that everyone did not already know it, but that the court would articulate the reasoning.  The reasoning, as reported, is (bold-face supplied by JAT):
The Swiss bank client brought his case to Strasbourg after his file was handed to the US in 2012. He claimed that his right to family privacy had been broken, contravening article eight of the human rights convention. 
But judges threw the case out on Tuesday on the grounds that Switzerland was justified in protecting its economic interests. The US was threatening criminal action against UBS unless the data was transmitted, which could have jeopardized the future of Switzerland’s largest bank.
I think most observers knew that Swiss banks and Switzerland justify anything based on their economic interests.  For a long time, their economic interests were served by assisting U.S. tax evasion (as well as other country tax evasion and even more dastardly conduct).  Now that is changing, so Switzerland must protect its economic interests by changing.  And, Switzerland and its banks owe no recompense to those who were affected by the change dictated by their economic interests.

Addendum:  The foregoing is as corrected pursuant to a comment by SwissTechie.  I have clarified that it was not a Swiss court who made the holding.  Rather it was the European Court of Human Rights.

Addendum #2:  Thanks to a reader for forwarding the link to the opinion.  I do not have it in English. I would appreciate receiving a copy in English or a link to a copy in English.

Addendum #3 12/26/15 3:30pm:

Addendum 12/26/15 3:30pm

The English Press Release is here.  Here is a cut and paste of the key parts of the English press release:

Decision of the Court
Article 8

As regards the legal basis for the measure, the Court reiterated that Agreement 09 and Protocol 10 had been negotiated and concluded by the Federal Council, approved by the Federal Parliament and then ratified by the Government in accordance with the procedure for concluding treaties set out in constitutional law. Inasmuch as the applicant submitted that the AFC’s decision of 1 September 2009 lacked any basis in law because Parliament had not yet approved Agreement 09 at the time, the Court agreed with the Government that the AFC had only taken the decision so that it could assess whether the conditions for affording cooperation had been met. At all events, the immediate implementation of Agreement 09 on a provisional basis had been confirmed by the Government at the time of its approval, and that of Protocol 10 had been confirmed by the Federal Parliament on 17 June 2010. 
As regards the foreseeability of the impugned measure, the Court reiterated that the European Convention of Human Rights should be interpreted in line with the general principles of international law. Indeed, under the 1969 Vienna Convention on the Law of Treaties regard should be had to “any relevant rules of international law applicable in the relations between the parties”. In the present case the Court considered relevant the Federal Court’s and the Government’s argument that Article 28 of the Vienna Convention allows the parties to an international treaty to go against the principle of non-retroactivity and provide for the consideration of acts or facts which occurred  before the treaty in question entered into force.  
In the present case the Federal Court had settled case-law to the effect that provisions on administrative and criminal-law cooperation requiring third parties to provide specific information were procedural in nature and consequently applied, in principle, to all present or future proceedings, including those relating to tax periods predating their adoption. The applicant, assisted by a lawyer, could not reasonably have been unaware of that judicial practice. He therefore could not validly submit to the Court that the interference had occurred in a manner which he could not have foreseen. The impugned measure could therefore be regarded as being “prescribed by law”. As regards the legitimacy of the aim pursued by the measure, in the knowledge that the banking sector is an economic branch of great importance to Switzerland, the Court held that the impugned measure formed part of an all-out effort by the Swiss Government to settle the conflict between the bank UBS and the US tax authorities. The measure might validly be considered as conducive to  protecting the country’s economic well-being. The Court accepted the Government’s argument that the US tax authorities’ allegations against Swiss banks were liable to jeopardise the very survival of UBS, a major player in the Swiss economy employing a large number of persons. Therefore, given Switzerland’s interest in finding an effective legal solution in cooperation with the US, it had pursued a legitimate aim within the meaning of Article 8 § 2 of the Convention. 
As regards whether the measure had been “necessary in a democratic society”, the Court noted that the Federal Administrative Court had ruled that the conditions set out in Article 8 for any interference with private or family life had been met in the instant case. The major economic interests at stake for the country and the Swiss interest in being able to honour its international undertakings had taken precedence over the individual interests of the persons concerned by the measure. 
With particular regard to the applicant’s situation, it should be noted that only his bank account details, that is to say purely financial information, had been disclosed. No private details or data closely linked to his identity, which would have deserved enhanced protection, had been transmitted. His bank details had been forwarded to the relevant US authorities so that they could use standard procedures to ascertain whether the applicant had in fact honoured his tax obligations, and if not, to take the requisite legal action.  
Finally, the Court observed that the applicant had benefited from various procedural safeguards. He had been able to lodge an appeal with the Federal Administrative Court against the AFC’s 7 June 2010 decision. The latter court had subsequently set aside the said decision on the grounds of violation of the applicant’s right to a hearing. The AFC had invited the applicant to transmit any comments he might have, of which right the applicant had availed himself. On 4 November 2010 the AFC had given a fresh decision finding that all the conditions had been met for affording administrative cooperation. The applicant had subsequently lodged a second appeal with the Federal Administrative Court, which dismissed it. The applicant had consequently benefited from several effective and genuine procedural guarantees to challenge the disclosure of his bank details and obtain protection against the arbitrary implementation of agreements concluded between Switzerland and the United States. 
It follows that there had been no violation of Article 8 of the Convention. 
Article 14 in conjunction with Article 8 
The Court found, essentially on the same grounds as those mentioned above in support of the absence of violation of Article 8, that the applicant had not suffered  discriminatory treatment for the purposes of Article 14 in conjunction with Article 8. It added that the applicant had provided no evidence to permit an assessment of whether his treatment would have been any different in another Swiss bank. 
Therefore, there had been no violation of Article 14 in conjunction with Article 8 of the Convention.
TNT has this article:  William Hoke,  Human Rights Court Rejects Appeal on UBS Data Transfer to IRS, 2015 TNT 248-2 (12/28/15), no link available.  It adds some background details, but I am not sure that it contributes anything that would be particularly informative to most readers of this blog.

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