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Oooh this is exciting. This article of mine - "Corporations, comity and the 'revenue rule': a jurisprudence of offshore" - has just been published in the London Review of International Law. What is it about? What does it tell us? Well ... https://academic.oup.com/lril/advance-article-abstract/doi/10.1093/lril/lrab001/6127562
... in order to explain that I am going to need to introduce three of the concepts namechecked in the title i.e. the "revenue rule", "comity", and "offshore". So, with apologies for being a bit 2017 about it ... (ahem) THREAD!! (2/?)
First up: the "revenue rule". This isn't actually a rule at all - it is just the basic territorial principle that a state's sovereign power ends where another one's begins. There are loads of exceptions to this principle, but a state's power to tax isn't one of them. (3/?)
If the UK passes a law saying all Canadians have to pay tax on their income to the UK exchequer, the Canadian courts will ignore it. Obviously. Because it isn't Canadian law. And that's all there is to the so-called revenue rule. (4/?)
People like to call it a rule though because that makes it sound like it constrains states' power to legislate on tax stuff with international effect. It doesn't. It's just a label for the fact that states can't expect foreign courts to enforce their tax legislation. (5/?)
Next up: "comity". Remember those exceptions to the territorial principle I mentioned? "Comity" is a sort of catch-all explanation for where those exceptions arise, when there isn't a better explanation in the circumstances. (6/?)
If a court is enforcing another state's law without, say, a treaty framework in place, and you ask an international lawyer what's going on, they will say "ah that's comity". It means friendship. Some things states are "friendly" about in this way, and some they are not. (7/?)
We have already seen that one thing they are NOT friendly about in this way is tax. That was the content of the so-called "revenue rule". One thing they ARE friendly about, however, is the existence of companies. (8/?)
If a state passes a Companies Act bringing fictional legal persons into being, those fictional legal persons AUTOMATICALLY have legal personality, can sue and be sued, benefit from limited liability &c, in all courts throughout the world. Because ... um ... "comity". (9/?)
So company law travels but tax law doesn't. Ok. Final concept: "offshore". Offshore is, you know, tax havens and stuff. International political economy scholar Ronen Palan characterises it as a "bifurcation" of sovereignty. What he is referring to with this is ... (10/?)
... the way in which sovereign states bifurcate their sovereignty into (1) a sovereign regime that applies within its territory in the ordinary way, and (2) an alternative regime that is favourable to international capital from a tax or regulatory perspective. (11/?)
"Offshore" is the composite global juridical space comprising all of these bifurcated regimes which are favourable to international capital. A key point made in my article is that this composite global space we call "offshore" can only exist because company law travels. (12/?)
Put simply, you can't really benefit from a state's bifurcated sovereignty if you aren't a legal person in that state. The entire system is underpinned by "comity". So it seems important to ask WHY "comity" applies such that company law travels. (13/?)
The textbook answer is that the territorial principle (which we have seen manifest in the "revenue rule") only applies in the case of "public, penal or revenue law", and (contrastingly) companies represent (ahem) "private orderings". But this is obvious nonsense. (14/?)
In the oft-cited early case showing the principle in action, Henriques v Dutch West India Co (1728), the company in question was one of those early modern trading companies exercising sovereign prerogative to do imperialist violence. Hardly a private ordering. (15/?)
And to this day the courts apply the comity principle to recognise foreign companies, completely universally, without ever pausing to check whether, for example, the company might be wholly state-owned and therefore not a private ordering after all. (16/?)
("What about the corporate veil?" you might ask. Well that would be question-begging. Respecting the corporate veil _follows_ from recognising the legal personality of the company; you can't presuppose the veil's existence in order to decide upon its existence.) (17/?)
So "comity" in repsect of private orderings is a fig-leaf. But what is UNDER the fig-leaf? An answer may be found in a US Supreme Court case called Bank of Augusta v Earle (1839). Essentially, it is that companies are always already there exercising legal personality ... (18/?)
... in the commercial sphere before the courts ever get to rule on their existence. Companies are, it seems, possessed of a kind of atavistic sovereignty of their own which travels of its own accord. (19/?)
And "offshore" is the space where this corporate sovereignty rules supreme. Peel away a territorially sectioned-off piece of the overlay of "public, penal or revenue law" and the global substrate of corporate sovereignty is what is revealed underneath. (20/?)
But the core point isn't really about how lawyers should understand offshore as a juridical phenomenon. The core point is to demonstrate the legal dimension to offshore's relationship with imperialist violence: (21/?)
Consider how it benefits capital-exporting countries of the global economic core to be able to export corporate capital to the periphery without the formerly-colonised periphery being entitled to concomittantly export its tax laws back to where the capital came from. (22/?)
Indeed the case which is usually cited in an English law context to show how tax law cannot travel like company law does is Government of India v Taylor (1955), in which India was unable to recover tax from a company incorporated in its former imperial possessor. (23/?)
And as we have seen this "comity" which is said to constitute the substrate of the offshore system finds its juridical origin in the imperial trading companies of the early modern era. (24/?)
And this is very much the dark side of "trading" we are talking about. The aforementioned Dutch West India Co was up to its neck in the Atlantic slave trade. And, in a really shocking and appalling irony, Roger Taney, the US Supreme Court judge ... (25/?)
... who held in that Bank of Augusta case that companies get legal personality outside their jurisdiction of origin, simply because they are already there and exercising it, took completely the opposite approach to black people in the notorious 1857 case Dred Scott v Sandford.
