--Order of the Second Senate of 22 March 1983 - 2 BvR 475/78 --
in the proceedings on the constitutional complaint by R.
a) the ruling of the Federal Fiscal Court (Bundesfinanzhof) of 21 February 1978 -- VII R 49/74 --
b) the ruling of the Munich Tax Court (Finanzgericht) of 30 January 1974 -- III 154/73 Z --
c) the command to render services by the Munich-Schwanthalerstraße Main Customs Office (executions office) of 28 April 1972 -- RK 3/72 (Ö) E 5 -- and writ of execution by the Munich Superior Finance Directorate of 27 March 1972 (S 1321 (Ö) -- 18/72/Z 42)
and indirectly against Article 1, first sentence, of the Act of 29 July 1971 on the Treaty of 11 September 1970 between the Federal Republic of Germany and the Republic of Austria on Administrative and Legal Cooperation in Customs, Excise Tax and Monopoly Matters [i] o 22 March 1983.
1. Article 1, first sentence, of the Act of 29 July 1971 on the Treaty of 11 September 1970 between the Federal Republic of Germany and the Republic of Austria on Administrative and Legal Cooperation in Customs, Excise Tax and Monopoly Matters, together with Article 2(1)(c), Article 11(2), first sentence, (4), (5) and (6), first sentence, of this Treaty is compatible with the Basic Law.
2. The constitutional complaint is rejected.
EXTRACT FROM GROUNDS:
The Complainant, a German national resident in the Federal Republic of Germany, objects to the execution of an Austrian order concerning tax liabilities by way of legal cooperation by German tax authorities in the Federal Republic of Germany.
1. In 1964 the Complainant exported on numerous occasions from the Federal Republic of Germany duty-free cigarettes. He had the declaration of goods filled out by German customs officials at the Austrian border. He transferred the cigarettes to foreign buyers under the supervision of German customs officials. He did not enter Austrian customs territory. The buyers then attempted to smuggle the cigarettes into Austria, and in so doing, they were arrested by Austrian customs.
On 5 July 1967, the Complainant was convicted by the Supreme Court in Austria of trade smuggle and intentional interference with the rights of the tobacco monopoly.
Prior to this, the Innsbruck Customs Office had issued two tax liability notices to the Complainant due to participation in cigarette smuggling. They had been sent to him by way of confirmed registered letter and handed over to him. The Complainant lodged a written appeal; this was rejected in January 1966 as unfounded. This decision was served by way of deposit with the Austrian tax authorities. It acquired legal force on 2 February 1966; further legal remedies were not lodged.
2. On 11 September 1970, the Treaty on Administrative and Legal Cooperation in Customs, Excise Tax and Monopoly Matters between the Federal Republic of Germany and Austria (hereinafter, Legal Cooperation Treaty) was concluded, which was consented to by the German legislature by way of Consenting Act of 29 July 1971 (Art. 1, first sentence, of the Act). The Treaty entered into force on 12 December 1971. [ii] An amendment to the Treaty of 12 December 1979 (Consenting Act of 5 September 1980 [iii] ) entered into force on 1 May 1981. [iv]
The Legal Cooperation Treaty is, according to its Preamble, borne by "the desire to regulate the mutual legal and administrative cooperation in customs, excise tax and monopoly matters." Pursuant to Art. 1(1), the parties commit themselves to provide each other with legal and administrative assistance on the basis of mutuality according to the provisions of this Treaty in the area of customs provisions and of provisions on excise taxes and monopolies, whose administration is a federal matter in both countries. Under Art. 2(1)(c), legal and administrative cooperation is also to be provided in execution proceedings, although only the execution of fines and cost in the criminal area.
Art. 4 provides that legal and administrative cooperation may be denied when the requested State is of the opinion that fulfillment of the request may result in impairment to the sovereignty, the security, the public order (ordre public) or other essential interests of the country.
Under Art. 7(1), in fulfilling the request, the law of the requested State is to be applied. Art. 10(2) together with Art. 6(1) determines that notices are to be served in direct traffic between the fiscal (customs) authorities of the two States and that the service of a document is to be established, including date of service, or by way of confirmation from the requested authority as to the form and date of service is to be identified.
The Amendment Treaty of 12 December 1979 inserted an additional article (Art. 10a) into the Legal Cooperation Treaty. Here is determined that notices, decisions and other written documents of the fiscal (customs) authorities in proceedings that are not execution proceedings are able to be served/made known directly by post to persons in the other Treaty State, even without resort to the competent fiscal (customs) authorities of the other Treaty State when this is expedient in view of the kind and content of the written document. Service/notice by resort to the competent fiscal (customs) authorities of the other Treaty State is not, however, ruled out by this.
Art. 11 of the Legal Cooperation Treaty reads:
(1) The request for execution is to be accompanied by a copy of the title of execution (decision, notice of arrears, proof of arrears), as well as by attestation from the competent superior finance directorate or the competent regional finance directorate that the decision underlying the request is final and enforceable.
(2) Titles of execution that meet the requirements of para. (1) are to be recognized by the competent superior finance directorate or the regional finance directorate of the requested State and to be declared enforceable. Article 4 remains unaffected.
(3) Execution is to be undertaken in the currency of the requested State. . . .(conversion provisions)
(4) The titles of execution are to be enforced in the same manner as comparable titles of execution in the requested State.
(5) Objections to measures under paras. (2) and (3), as well as to the permissibility or the manner of execution, are to be decided by the competent authorities of the requested State according to its law.
(6) Objections to the existence, the amount or the enforceability of the claim whose satisfaction is to be compelled are to be resolved by the competent authorities of the requesting State according to its law. In the event such objections are raised with the requested authority, the requesting authority is to be notified of such, whose decision must be awaited; measures to ensure the execution may be undertaken.
3. In March 1972, the Tirol Regional Finance Directorate requested the Munich-Schwanthalerstraße Main Customs Office to collect 211,136.97 Austrian Schillings in tax receipts and delay fees, which, according to proof of arrears by the Innsbruck Customs Office, the Complainant owed on the basis of the two final and conclusive tax notices. The Munich Superior Finance Directorate recognized the proof of arrears as title of execution and declared it to be enforceable. The Schilling amount was converted into DM 29,084.11. The Munich-Schwanthalerstraße Main Customs Office issued a command to render services for this amount against the Complainant; on the basis of this, execution proceedings were introduced.
4. The Complainant first filed a complaint against the German command to render services; this was rejected by the Superior Finance Directorate. He then filed a complaint with the Tax Court against this rejection, and following dismissal by the court, he lodged an appeal with the Federal Fiscal Court.
The Complainant considers the execution proceedings entered against him and their legal basis -- Art. 11 of the Legal Cooperation Treaty together with the German Consenting Act -- to be incompatible with his "rights stemming from the principles of democracy and rule by law available to him directly as subjective rights under Art. 2(1) of the Basic Law," as well as with his rights under Arts. 19(4), first sentence, and 103(1) of the Basic Law.
1. The Complainant considers the extension of legal cooperation to his case as retroactive effect that is incompatible with the principle of rule by law:
At the time of the proceedings conducted against him in Austria, the Complainant alleges that he was able to feel secure in Germany from Austrian measures. In view of the absence of relevant interstate agreements on legal cooperation, he felt that he was able to rely on being beyond the reach of Austrian authorities while in Germany; . . .
2. The Complainant also views the according of legal cooperation to enforce tax demands of a foreign state as a violation of the principle of democracy. He considers such legal cooperation to be constitutionally impermissible.. . .
3. The Complainant additionally considers the execution proceedings to be unconstitutional because he had not been properly served the Austrian tax titles underlying them.. . .
4. Finally, the Complainant views Art. 19(4), first sentence, of the Basic Law as having been violated.
The Complainant alleges that in executing Austrian tax notices under the Legal Cooperation Treaty, neither the existence of the tax claim nor the compatibility of the resort to the taxable person with German legal provisions, including the German Constitution, are reviewed. . . .
The Federal Minister of Finance submitted the following comments on the part of the Federal Government with regard to the complaint of unconstitutionality:
1. The Legal Cooperation Treaty does not give rise to any retroactive effect. . . .
2. A violation of the principle of democracy is not apparent. . . .
3. Service by the Austrian authorities does not violate international law. . . .
4. Art. 19(4), first sentence, of the Basic Law does not require that measures by foreign public authorities must also be subject to review by German courts. Therefore, legal protection against such measures is determined solely by the legal system of the foreign State. . . .
The complaint of constitutionality is admissible. . . .
The constitutional complaint is not founded.
1. From the standpoint of the Constitution, the interpretation and application of the Legal Cooperation Treaty underlying the attacked acts are as such not objectionable.
According to the interpretation by the Federal Fiscal Court, the material scope of application of the Legal Cooperation Treaty also covers, pursuant to Arts. 2(1)(c) and 11, legal assistance in the execution of enforceable and final and conclusive titles of execution that became effective prior to the entry into force of the Treaty. This interpretation is both obvious and tenable; it is therefore to be taken as a basis for the subsequent constitutional review.
2. The Legal Cooperation Treaty does not violate the constitutional prohibition on retroactive effect (Arts. 20(1) and 28(1), first sentence, of the Basic Law together with Art. 2(1) of the Basic Law). Retroactive effect with respect to the Complainant is not present:
a) A legal norm gives rise to retroactive effect when the start of its temporal scope of application is normatively fixed to a specific date that precedes the date on which the norm legally exists, i.e., has become valid.
According to German constitutional law, norms of statutory law become normatively existent upon orderly proclamation, i.e., normally on the date of publication of the first copy of the proclamation journal. The date of the start of the temporal scope of application (to be distinguished here) is often determined in the law (ordinance, charter) itself as the "date on which it becomes effective"; for formal legislation on the Federal level, Art. 82(2) of the Basic Law determines in this regard that in the absence of such provisions, a law or ordinance is to "become effective on the 14th day after the end of the day on which the Federal Law Gazette containing it was published." The start of the temporal scope of application can be established either uniformly or differently for various provisions.
b) With regard to norms in international treaties, there result special features. These can be traced back to the fact that the point at which an international commitment becomes binding (the "conclusion" of the treaty), the point at which it enters into force (in the sense of the start of the temporal scope of application) and the date of internal applicability of a treaty norm often deviate from one another. An international treaty basically becomes internally applicable under German constitutional law only once the treaty has been agreed to on the international level (e.g., by way of exchange of instruments of ratification) and its wording and the fact that it has been concluded have been officially announced in an internal proclamation organ.
Since this date of internal proclamation of the fact that an international agreement has been reached occurs later than the date on which the international agreement was actually reached and often later than the date of the international "entry into force" (usually determined in the text of the treaty itself), this often gives rise to retroactive applicability of the treaty; since a treaty State is internationally bound -- leaving aside the effects -- upon conclusion of the treaty, its organs, such as its courts, are required to observe the treaty beginning with this ("international") date at the latest (which is normally officially announced to them internally at a later point).
This general applicability of the treaty as a whole has to be distinguished from the question as to the date on which the treaty itself determines as having entered into force, i.e., the start of its temporal scope of application (or that of its various norms).
Retroactive effect of the treaty on the international level is to be found when the start of its temporal scope of application is fixed on a date occurring prior to the conclusion of the treaty (reaching of agreement, coming into existence of the treaty); retroactive effect on the internal level is to be found when the start of its international temporal scope of application is fixed on a date occurring prior to the internal official announcement that the treaty has come about.
c) For the instant case, this means:
aa) The Legal Cooperation Treaty, signed on 11 September 1970, became internationally effective with the exchange of instruments of ratification (Art. 18(1)); according to Art. 18(2) of the Treaty, it entered into force one month following this exchange; the exchange of instruments of ratification took place on 12 November 1971. By way of notification of 17 December 1971 in the Federal Law Gazette 1972 II, p. 14, published on 20 January 1972, it was officially announced that the Treaty had entered into force (internationally) on 12 December 1971. Thus, as of 20 January 1972, the Treaty was to be applied by German authorities and courts -- with retroactive effect from 12 December 1971.
bb) In the proceedings below, the tax notices from the Austrian revenue authorities became effective under Austrian law on 2 February 1966; the Austrian authorities requested collection of these pursuant to the Legal Cooperation Treaty in March 1972, i.e., at a point at which the Treaty could be (and had to be) applied internally by German authorities and courts.
The application of the Legal Cooperation Treaty by the German authorities and courts to the request for collection in the case of the Complainant thus does not fall within the period in which the Treaty gave rise to retroactive effects from the standpoint of the German legal system. Accordingly, a violation of the constitutional prohibition on retroactive effect vis-à-vis the Complainant is to be ruled out in the instant case.
cc) It is not a question as to the start of its temporal scope of applicability -- and thus not a question as to retroactive effect -- as regards whether the Legal Cooperation Treaty is also to be applied to such collection proceedings that, as titles of execution, are based on tax notices that became effective prior to the international (12 December 1971) or the internal German (20 January 1972) applicability of the Treaty, as in the instant case. This is rather a question of the material scope of application of the Treaty.
3. a) Nevertheless, the application of the Legal Cooperation Treaty to the case of the Complainant led to a change in his procedural position that had existed prior to conclusion and entry into force of the Treaty. It is possible that in this temporal component of the material scope of application of the Legal Cooperation Treaty, there lie effects for the affected citizen's sphere of basic rights and liberties that are of considerable constitutional significance. However, these effects are not based on the extension of a norm's temporal scope of application into the past -- and thus not on its retroactive effects -- but rather on the fact that the Legal Cooperation Treaty seeks to regulate for the future (beginning with its internal applicability) "existing" procedural positions and thus necessarily embraces circumstances lying in the past as well.
Legal norms commonly function in this manner, since they nearly always regulate fact patterns with a "past" whose causes and circumstances are based on periods prior to the date on which the norm became effective. Such a finding alone does not, however, give rise to a constitutional violation.
Basic rights and the principle of rule by law place narrow limits on all sovereign acts that negatively interfere with a constitutionally protected legal status. The principle of the rule of law requires that the citizen must be able to rely on the fact that when his conduct is not contrary to law in force at a given time, the judiciary will not subsequently qualify it as unlawful; [v] Art. 103(2) of the Basic Law has given expression to this for substantive criminal law; but this must also apply, for instance, to administrative law and to the civil law of torts -- in general, for all burdensome regulations that embrace conduct subsequently declared to be unlawful.
The practical focus of the problematic thus rests in cases where the legislature -- without subsequently qualifying the citizen's earlier conduct as unlawful -- attaches burdensome legal consequences to this conduct or to some other event lying in the past. The areas of life in which this may transpire are numerous and complex: from tax law in all of its threads and the law on professional licensing to, e.g., the law on administrative procedure (for instance, the "stiffening" of examination and study regulations). In this area, fundamental constitutional principles run up against one another: on the one hand, legal certainty, behind which ultimately stands the value of liberty -- reliability of the legal system is, above all, a fundamental prerequisite for liberty, i.e., the freedom to determine oneself the style of one's life and the course it is to take;
b) By embracing such circumstances, the Legal Cooperation Treaty does not violate the principles of legal certainty and protection for bona fide acts, together with Art. 2(1) of the Basic Law.
aa) The norms of the Legal Cooperation Treaty under review here involve regulations of procedural law: The regulation was provided for in the Treaty in view of the fact that sovereign conduct by the authorities of a State in the sovereign area of the other State would normally represent a violation of international law without the consent of the latter. [vii] The Legal Cooperation Treaty and the Consenting Act to it do not establish (substantive) tax liability but rather merely empower the execution authorities to intervene. German law refrains in this context from the regulation of substantive tax liability; as a result of the power to apply law, which the German Consenting Act imparted to the Legal Cooperation Treaty pursuant to Art. 59(2) of the Basic Law, the debtor in the execution proceedings is merely obligated to tolerate the execution by German authorities in accordance with Art. 11 of the Treaty.
bb) Although the provisions of the Legal Cooperation Treaty under review here are thus of a purely procedural-law variety, this does not necessarily mean that they are constitutionally unobjectionable. Even as regards purely procedural-law provisions, the Consenting Act to the Legal Cooperation Treaty must be measured against the principles of legal certainty and protection for bona fide acts; failure to observe these might give rise to a violation of the Complainant's basic right under Art. 2(1) of the Basic Law.
Legal certainty and protection for bona fide acts as constitutional standards of review are also called for when the legislature -- regardless of whether, as here, in the form of an international treaty -- exercises influence on a procedural position in which the citizen has thus far found himself. Procedural regulations are also capable of establishing bona fide positions, at least within the scope of already pending proceedings or given procedural positions. In the area of administrative and court proceedings, important positions for the protection of the citizen's rights can be curtailed or done away with by way of changes in procedural rules affecting pending proceedings. One must distinguish here between the significance and weight of various procedural regulations. Procedural law often means simply technical regulations, "rules of the game," definition of the system; but it may also contain elementary guarantees.
The introduction of a new possibility for execution with regard to already effective acts is to be viewed as a fundamental change in the debtor's previously existing procedural position. This can subsequently remove the basis for a debtor's general economic dispositions. In the contentious proceedings underlying the execution, the way in which he exercises his rights -- which is founded on reliance in the continued existence of the given state of the law in execution proceedings -- may thereby spell his -- economic -- undoing. Even though to a certain extent reliance in the continued existence of procedural regulations is not as constitutionally protected as reliance in the maintenance of substantive legal positions, [viii] procedural positions nevertheless may, on account of their significance and weight, be deserving of protection to the same degree as substantive law. For instance, the Federal Constitutional Court declared a subsequent interference with statute-of-limitations provisions -- which were qualified as procedural law -- to be at least not justified when the period of prescription (here, criminal prosecution) has already expired; in such a case, the boundary on a constitutionally permissible change in procedural law has been transcended. [ix]
Even seen as a purely procedural new regulation, the Legal Cooperation Treaty must pay as high regard to the citizen's established, protected procedural positions as a new substantive regulation must pay to substantive-law positions in accordance with, above all, basic rights.
cc) As regards the issue of protection for bona fide acts with respect to changes in procedural law, a fundamental circumstance is whether one is faced with legally consummated proceedings.
To the extent that contentious proceedings are involved, substantive res judicata sets a boundary here. Other boundaries may be found, depending on the subject matter of the procedural regulation, in the conclusion of legal process or of the pendency. Such sorts of graduated delineations according to commencement, course and termination of proceedings or parts of proceedings may very well be justified, since the proceedings and not the underlying actual facts forming the subject of the dispute are the facts regulated here.
With regard to execution proceedings, however, the start and end of individual execution measures may be able to be determined with certainty; but for the end of the execution, for instance, in the event of unsuccessful efforts to execute, a fixed date or formal conclusion is often unable to be ascertained. The same applies with respect to the often long-lasting period in which an executable title is present but execution proceedings have not yet been introduced.
dd) Even when in the individual case a formal conclusion to the proceedings is unable to be ascertained in execution, the question of protection for bona fide acts nevertheless arises when, as in the proceedings below, the issue is executability as such; for the debtor, non-executability also means security that the creditor may not seize: The previously non-existent legal possibility opened by the Legal Cooperation Treaty of 11 September 1970 -- namely, that also Austrian titles of the kind described in this Treaty are to be executed in the Federal Republic of Germany by way of legal cooperation -- did not merely change or extend previously existing procedural law but rather introduced a completely new general legal basis for execution.
From the standpoint of international policy, this also represents a weighty step seldom seen in the practice of States.
According to general public international law, a State is basically not obligated to tolerate in its sovereign territory the undertaking or execution of the sovereign acts of another State, [x] or to assist in this by way of legal cooperation; public international law also does not, of course, prohibit such toleration or assistance; it leaves this decision to the States.
States tend to practice extreme discretion in cases involving the execution of foreign criminal sentences or the collection of foreign tax liabilities in their own sovereign territory. Extradition for the purposes of execution of sentence (in the requesting State) is as a rule here the utmost boundary of legal cooperation that a State is prepared to offer (and particularly for fiscal crimes, States often reserve in extradition treaties the freedom to deny extradition). In the law of tax collection as well, they consistently refuse to execute the foreign tax liability title in their own sovereign territory -- under public international law, they are, however, not prevented from doing so. The practice by the Federal Republic of Germany in this area corresponds with the general practice of States. Nevertheless, it does recognize some exceptions in tax liability law: in several (usually, double-taxation) agreements, mutual execution of legally effective tax liability titles is agreed upon, as in the double-taxation agreements with Denmark of 30 January 1962, [xi] with France of 21 July 1959 [xii] or with Belgium of 11 April 1967. [xiii] With respect to assistance in execution, the Legal Cooperation Treaty with Austria of 11 September 1970 is particularly far-reaching in that it -- in the area of customs, excise tax and monopoly matters under Art. 1 -- agrees to assistance in execution not merely for tax liability titles but also for sentences in Austrian administrative penalty proceedings, to the extent that the Austrian revenue (customs) authorities in the administration of criminal justice or the German customs authorities are responsible for the investigation (of course, only for the execution of fines and costs, with arrests and execution of prison sentences being excluded).
On the other hand, the mutual execution possibilities opened by the Legal Cooperation Treaty of 1970 are not -- at least in relation to Austria -- not entirely new; even the Legal Cooperation Treaty of 1954 allowed for the execution of "public taxes, insofar as these are levied in the Treaty States for the Federal Government, the states, communities or regional authorities" (Arts. 1, 3 ff.); this Treaty expressly excluded "excise taxes administered in the Treaty States by the Federal Government, as well as customs and monopoly taxes" (Art. 1, second sentence). It was to these latter taxes, excluded under the 1954 Treaty, that the 1970 Treaty extended mutual possibilities for execution. Although this may seem to be simply an expansion of the circle of executable titles in the area of tax law, the fact is, however, that a new (general) legal basis for execution has been created with respect to excise taxes, customs and monopoly taxes.
ee) It may not, however, be deduced that a protected position for bona fide acts has arisen, such that "old titles" may not be to be subjected to this new legal basis for execution:
(1) The previously existing basis of non-executability of such titles (prior to the applicability of the 1970 Legal Cooperation Treaty) was not founded on a subjective right or on some other legally protected, subjective interest of the debtor. The prohibition under public international law on undertaking acts of execution in the sovereign territory of an affected foreign State without its consent exists solely in the interests of States as such, not in the interests of private persons; their reliance that such consent is not accorded is not protected under public international law. It is thus not possible to establish legal elements of reliance on the basis of a legal position of the private person under public international law. For this reason, there is no internal duty to observe -- under Art. 25 of the Basic Law -- a legal position.
(2) From the standpoint of constitutional law as well, one does not find a legal element of reliance that would be deserving of protection. The universal non-executability of foreign tax liability titles is nothing more than a mere fact, not a legal position of the citizen.
Although the retreat from the general non-executability of foreign tax liability titles creates a completely new legal basis for execution, with its effects going beyond a mere change in existing procedural law, it cannot be said that it is possible to rely here on specific stipulated statutory guarantees and their continued existence.
There may also very well be limits under the Constitution for the extension of the material scope of application of a newly opened execution possibility to execution titles lying far in the past. Nevertheless, the limits have not been transcended in the proceedings below.
In the first place, on account of the 1954 German-Austrian Legal Cooperation Treaty, it had to be expected that the planned legal cooperation for execution of tax liability titles in customs, excise tax and monopoly matters would also be introduced. Moreover, it should be mentioned that the tax liability titles executed here had become effective only a few years prior to the signing of the 1970 Legal Cooperation Treaty.
Furthermore, the issue of the executability or non-executability of tax liability titles -- including foreign ones -- bears the decisive characteristic that one is dealing with the enforcement of final and conclusive, or legally effective, established liabilities of the debtor under substantive law, regardless of whether these are owed a foreign State. The regulation introduced by the Treaty is also not unreasonable. Despite the fact that the debtor is more or less exposed to such changes in procedural law, this exposure, though temporally long, is nevertheless limited. The basis of the execution is usually the procedurally established, legally effective, formal determination of the substantive duty of the debtor to perform -- a duty that is, in principle, no less effective with regard to an Austrian title of execution than with regard to a domestic one. The debtor's "exposure" vis-à-vis execution actions is thus ultimately based on the circumstance that the debtor has not satisfied the claim to be executed, that he has remained in a state of non-fulfillment that he could end at any time by way of performance. This also justifies his general "exposure" vis-à-vis actions by the creditor. It is thus from the outset not apparent that the debtor has a protected position generally enabling him to be spared the execution proceedings. Reliance on the fact that substantive law will not be enforced is basically not protected.
The debtor's procedural position at the time the execution title came into existence -- in other words, the lack of provisions regarding the possibility of execution as such and the extent of this -- does not disclose a "well-acquired" procedural-law status of the debtor; such a status, if present, would not be able to be altered with the consequence that subsequent changes in procedural law, although constitutionally relating to the style of previously existing execution possibilities and to procedural questions, may no longer interfere with the "acquired" procedural status.
This is the direction taken by the Complainant's argumentation, according to which, upon issuance of the Austrian title of execution, he relied on the fact that it was not executable in the Federal Republic of Germany and that he must be protected in this reliance. In response to this argument, it must be pointed out that the procedural rule of executability at the time the title came into existence is not in place for its own sake; rather, its procedural structure alone represents the actual core of the execution proceedings, namely, the enforcement of substantive law. Procedural rules on execution, in particular, the rules on the possibility of executability itself and its extent, therefore cannot be used by the debtor in the sense of an acquired procedural status to oppose his substantive obligations to perform. Mere reliance on a lack of executability or on barriers to execution, which then prompts the debtor to conduct his defense in sentencing proceedings in a negligent fashion, is not deserving of protection; he must from the outset carry the risk that execution may indeed be undertaken at some later point.
For the instant proceedings, this means:
From the standpoint of the Basic Law, the citizen most certainly may export to Austria, conduct trade and business there and realize profits; however, reliance on the fact that Austrian tax liability titles are generally not executable, or that they will remain so, in the Federal Republic of Germany (with observance of the German legal reservation) is not established by the Basic Law.
c) There are, however, constitutional limits on the introduction of general execution possibilities for foreign titles of execution:
It follows from the Basic Law's principle of rule by law that the according of legal cooperation by the Federal Republic of Germany is subject to minimum requirements. Such cooperation is constitutionally permissible only when:
-- substantive foreign tax law does not run counter to the Federal Republic of Germany's constitutional public order (ordre public), and
-- foreign procedural law under which a title is granted for the tax liabilities satisfies the minimum standard of procedural justice required by the principle of rule by law.
In the instant proceedings, it is unnecessary to answer the question as to the details surrounding the requirements placed by the Constitution on legal cooperation treaties (or on unilateral German statutory regulations of the type listed in §§ 722, 723 of the Rules of Civil Procedure or § 117 of the tax code): neither the substantive Austrian law of customs levies, the proceedings to award titles for such outstanding taxes, nor the application of this law in the case of the Complainant give rise here to (German) constitutional objections. If necessary, resort also could have been had to the application of the reservation clause in Art. 4 of the Legal Cooperation Treaty to remedy the situation. But it is not apparent that in the proceedings below, the Constitution would require that use be made of this reservation.
d) With respect to the execution possibilities at issue here, there are also weighty interests of the common good in the regulation found in the Legal Cooperation Treaty. Such an interest is the German interest in the possibility of execution of German tax liability titles in Austria, including those with effect prior to the applicability of the Treaty or tax obligations arising earlier, especially since Austria is one of the Federal Republic of Germany's most important trading partners.
e) Accordingly, it is unable to be determined that the Complainant has suffered a constitutional violation of protected reliance due to the fact that the German authorities executed the Austrian tax notices entered against him by way of legal cooperation. Rather, this represents a reasonable interference founded on a legal basis that serves in the enforcement of substantive law.
4. It is unnecessary to deal with the question of whether the complaint of unconstitutionality can, in an admissible manner, be supported by the assertion that the recognition and execution of foreign tax liability notices are not compatible with the principle of democracy ("no taxation without representation"); this assertion does not alter the Complainant's position:
a) It is true that, in contrast to most other intervention authorizations, a connection cannot be established between the purpose and the weight of intervention in the area of tax laws, and for this reason it is not possible to conduct a concrete review of proportionality (Verhältnismäßigkeit) in the sense of a balancing of the respective interests in a given case.
However, the argument that in absence of democratic representation, tax intervention could extend uncontrollably far is just as unconvincing as the Complainant's hope that democratic representation guarantees sufficient limitation on possible tax interventions. Although the democratically composed community as a whole is not likely to impose an excessive tax burden running counter to its present collective interests, this does not in any way form a guarantee that in some cases, the majority expects a minority to bear a disproportionate share or that this might be shifted to future generations.
The rooting of tax intervention in democratic representation thus means only limitedly effective protection against excessive intervention.
Art. 14(1) of the Basic Law nevertheless places an outermost limit on tax intervention by German sovereign power: at least choking, confiscatory taxation is unconstitutional, in any event when the imposition of the duty to pay taxes "would disproportionately burden an individual under this duty and fundamentally interfere with his assets,"
b) Under public international law, there are barriers on the taxation of a foreigner, which may extend further than the limitations placed by internal law on the taxation of nationals; as a result, a foreigner might be subject to greater protection from intervention by the foreign State burdening him. [xviii] This must also be taken into consideration in the context of granting of legal cooperation by the Federal Republic of Germany for foreign tax claims against resident Germans.
For the imposition of taxes on a foreigner living abroad, this being attached to facts that wholly or partly have transpired abroad, then in order to avoid violating the prohibition on interference in the sovereign territory of a foreign State, there need be correct points of contact for the imposition of taxes in the State imposing them. [xix] These points of contact and their proximity to the object attached must, under public international law, satisfy the requirement of a minimum of discernability.
This requirement forms an essential definitional limitation on cases that can be permissibly covered by the regulations of a State's own legal system, a restriction on its international regulatory competence. Clear boundaries are placed on the legal possibility of taxing foreigners by the requirement of contact with, for instance, domestic nationality, business establishment, domicile or residency, the fulfillment of the definitional elements for taxation within the country, or the realization of a profit within the country that is of significance for tax law.
c) The conclusions derived by the Complainant from the Basic Law's principle of democracy would above all mean that the Federal Republic of Germany is, to a great extent, constitutionally incapable of taking part in international legal cooperation; moreover, these deductions would also incapacitate the applicability of foreign law by German authorities and courts, especially since they could not be limited solely to the execution of foreign tax liability titles. In contrast to the Complainant's view, the principle of proportionality does not afford the adequate compensation for the lack of democratic representation with regard to the applicability of foreign public, or even civil, law. The Basic Law operates under the premise that the State constituted by it is integrated into the international legal system of the community of States. [xxi] In addition, the principle of democracy under Art. 20 of the Basic Law has to be viewed in the light of this integration. It does not as such prevent the recognition and execution of foreign sovereign acts by German authorities and courts within the sovereign territory of the Federal Republic of Germany.
d) In the proceedings below, there were sufficient, material points of contact for the raising of a tax claim by the Austrian revenue authorities. According to the findings by the Austrian authorities and courts, the Complainant was an accomplice of the offenders operating on Austrian soil and aided in the realization of a profit in Austrian sovereign territory of significance for tax law, namely, the transport of smuggled goods across the border; in addition, the desired profit from the common activities of the Complainant and his co-offenders was a detriment to the Austrian revenue authorities, namely, an evasion of Austrian customs and excise taxes, this also having been briefly realized as well. Furthermore, the Complainant's special contribution to the activities -- his arranging for clearance for the cigarettes by the German customs authorities prior to export to Austria -- was intentionally designed for Austrian sovereign territory and, in and of itself, endangered the tax claims expected by Austria.
For these reasons, there are no objections under public international law when Austria assesses tax claims against the Complainant. This type of tax assessment also does not conflict with public order under the Constitution of the Federal Republic of Germany.
e) In light of the foregoing, it is not in violation of the democratic principles of rule by law within the meaning of the Basic Law when the German legal system recognizes Austrian tax claims by way of the Consenting Act and declares them to be executable within the country. The Complainant's assertion of lack of democratic representation in Austria is, as measured against the standards of the German constitutional order, just as unmerited as would be that by a foreigner assessed by the Federal Republic of Germany on the basis of a comparable set of facts and pursuant to a similar treaty basis.
5. The Complainant also alleges a violation of his basic rights by way of the fact that the Austrian authorities failed to observe provisions regarding service of process and thus violated Austrian procedural law and public international law; in the proceedings surrounding the constitutional complaint, these allegations are only of significance insofar as the decisions made and actions taken by the German courts and authorities might have come about in violation of basic procedural rights, have been arbitrary or represent a violation of Art. 103(1) of the Basic Law.
The violation of a service provision does not in every instance also mean a violation of the Basic Law. Such may not even be assumed when service is said to violate public international law or the German ordre public, thus giving rise to a rejection of the request for legal cooperation pursuant to § 4 of the Agreement.
A violation of basic procedural rights in proceedings before German courts and authorities is not asserted by the Complainant; such is also not apparent. It is furthermore unable to be determined that the German courts and authorities would have turned down an allegation of violation of public international law and German ordre public on the basis of arbitrary, irrelevant considerations. The issue of violation of public international law, which could establish an international responsibility on the part of the Federal Republic of Germany,
a) It may very well seem doubtful whether service of the two notices regarding customs duties by the Innsbruck Customs Office on June 9 and 16 June 1965 by way of registered letter was permissible under public international law, vis-à-vis the Federal Republic of Germany, as a sovereign Austrian act to be effected in Germany. Services of process of this sort represent sovereign acts on the territory of a foreign State and require the consent of the affected State. [xxiii] Direct service by mail was at that time not provided for in the Treaty, nor was service via direct communications between the tax authorities. Such service was first introduced -- except for execution proceedings -- in the Additional Treaty of 12 December 1979. [xxiv] It seems doubtful whether a "tacit understanding" by the German authorities could have been satisfactory here, since it is questionable whether the German authorities involved in the recognition were empowered at the relevant date under German law to make arrangements regarding German sovereign rights with respect to Austria. [xxv] Under public international law as well, a State's organs other than the Foreign Office -- in particular, its administrative authorities or even its courts -- are not necessarily empowered as representatives to grant or refuse consent, or to work to bring this about implicitly, that will be effective under public international law; in other words, public international law neither protects good faith in the representative authority of subordinate organs, nor does it recognize a presumption in favor of such authority.
Even if Austria's service by mail of its sovereign notices within the sovereign territory of the Federal Republic of Germany without the consent of the competent German organs were nevertheless taken to mean encroachment under public international law, however this alone would not have established a violation of the Complainant's constitutional rights. This also applies when -- as submitted by the Complainant -- this sort of contravention of public international law represents a violation of general rules of public international law in the sense of Art. 25 of the Basic Law, which are an integral part of Federal law and are to be observed by German authorities and courts as objective law taking precedence to statutory law and having the rank of Federal law (Art. 25, second sentence, of the Basic Law). The prohibition under public international law on undertaking sovereign acts on the sovereign territory of a foreign State without the latter's consent or toleration is, on the level of public international law, a norm exclusively directed at States, serving to protect sovereignty as such. Although Art. 25 of the Basic Law enables participants in proceedings before courts to rely, within the framework of the rules of procedure, on such norms as objective law, conferring also upon these norms, according to their content and the object of dispute, legal effects for or against a participant, this does not give rise to subjective rights of constitutional rank for the participants. Furthermore, the general rule of public international law referred to here does not provide any indications as to the effect that service undertaken in violation of public international law has in the internal area of the infringed upon State, here, the Federal Republic of Germany.
In addition, in spite of the likely improper service of the tax liability notices under public international law, the Complainant took part in the proceedings in Austria and sought legal redress. However, he does not allege to have asserted a possible violation of public international law in those proceedings.
b) Reservations arising under the principle of right to a legal hearing -- as part of the constitutional ordre public and of a minimum constitutional standard to be observed by way of Art. 25 of the Basic Law -- with respect to the service of the preliminary decision on appeal by the Innsbruck Customs Office of 19 January 1966 also do not in result alter the position. This decision was merely served by deposit with the Austrian revenue authorities.
Prerequisite for this form of service is, according to § 100 of the Austrian Federal Revenue Ordinance (Bundes-Abgabeordnung; BAO), that the addressee of service resides permanently outside of Austrian Federal territory and a request for designation of an agent residing within the country authorized to receive service has not been complied with. The Complainant was served with the latter request through deposit at a post office in Munich; a further effort to effect service failed on account of the Complainant's having vacated his apartment. With regard to the deposit, it was later determined during a second attempt to render service that the recipient had "meanwhile" moved to an unknown address; it is unclear whether he had still lived at the address at the time of deposit. A refusal to accept service in the sense of § 104 of the BAO, which enables service to be deposited, was not involved, since the Complainant had not responded to the question of acceptance of the document. It has not been determined whether the Complainant had already moved to a new address at the time of deposit of the document at the Munich Post Office (§ 104(2), second sentence, of the BAO).
It is not under review here whether the request to designate an agent authorized to receive service, as required under § 100 of the BAO, was itself improperly served under Austrian law, such that an essential prerequisite was lacking for service by deposit with the revenue authorities. But even when the Austrian service provisions were not properly complied with, it cannot be said that, in result, the principle of right to a legal hearing was violated: the Complainant, who sought legal redress, in any event had the opportunity to take ample precautions that the message (§ 100 of the BAO) reached him. In this situation, there has been no violation of a minimum procedural standard.
6. Art. 19(4), first sentence, of the Basic Law has not been violated.
a) aa) The recognition and execution of a foreign sovereign act in the Federal Republic of Germany may touch upon the protective scope of Art. 19(4), first sentence, of the Basic Law, even when this constitutional provision merely guarantees the reviewability of acts of German public authority, [xxvi] since the decision to recognize and the executory seizure by the German executing authorities represent interference by German public authority.
In the instant case, however, access to the tax courts was available; this also initiated the review of the German statutory basis for the relevant interference. This basis, provided for in the Consenting Act to the Legal Cooperation Treaty, only requires, however, the presence of a formally correct Austrian title of execution as a statutory definitional element triggering the legal consequence of "admissibility of recognition and execution" (Art. 11(1) and (2) of the Legal Cooperation Treaty); a negative element is composed of the duty to review whether the German ordre public or other essential German interests have been impaired (Art. 4 of the Legal Cooperation Treaty).
In the proceedings below, the tax courts conducted an exhaustive review and accorded legal protection. To this extent, Art. 19(4), first sentence, of the Basic Law has thus been complied with, since the German courts were allowed to, and did in fact, rule on the presence of the definitional elements under German law required for the recognition and execution of the Austrian tax liability notices. The German courts did not, however, undertake a substantive review for whether a tax liability existed under Austrian law and whether the Austrian proceedings were conducted correctly since these did not form statutory elements required for recognition and execution according to the German provisions.
bb) Nonetheless, in the light of Art. 19(4), first sentence, of the Basic Law, the legislature is not permitted, by way of corresponding enumeration of the statutory elements for seizure, arbitrarily to limit to a small number of, possibly only formal, points the scope for judicial review of foreign titles to be executed in the Federal Republic of Germany and thus to withdraw the true essence of the decision -- to the extent that such a decision is able to violate rights in the sense of Art. 19(4), first sentence, of the Basic Law -- from judicial review.
The extent and effectiveness of judicially ordered legal protection can be restricted by a corresponding definition of the statutory elements for recognition, a definition that is tied to the result of the application of (here, foreign) law and excludes or constricts its review, at least within the framework of the norm actually to be applied. [xxvii] From the standpoint of Art. 19(4), first sentence, of the Basic Law, such rules are in any event unobjectionable when they pay regard to a constitutional interest of a rank comparable to Art. 19(4), first sentence, of the Basic Law and when judicially ordered legal protection is in some other manner assured against the "predetermined" application of law. For instance, in the area of internal law, the effective force or legal force of State decisions serves to provide legal certainty; in the execution of a domestic ruling or of an effective administrative act as well, it is, in principle, not further reviewed whether the substantive legal requirements for the issuance of such were given; the sole definitional element in the law of execution, which forms the basis for the seizure in the course of an execution, is the existence of a title with such legal force.
In such cases, account is made for Art. 19(4), first sentence, of the Basic Law in that judicially ordered legal protection was possible as the title of execution came into existence.
The possibility for reviewing a definitional element of the German basis for seizure thus satisfies the requirement of Art. 19(4), first sentence, of the Basic Law; but with respect to the substantive correctness of the (foreign) tax liability title to be executed, the lack of the possibility of review may harbor a certain deficit in legal protection in comparison to the possibilities for legal protection afforded in cases involving the substantive correctness of domestic titles of execution, this being required in view of Art. 19(4), first sentence, of the Basic Law in the event of the exercise of German public authority.
b) Thus, the conclusion of legal cooperation treaties -- or comparable legal acts that facilitate the execution of foreign tax liability titles within the country -- is also subject to minimum constitutional requirements that comport with the underlying concepts of Art. 19(4), first sentence, of the Basic Law as well. It must nevertheless be taken into consideration that a review of the substantive correctness of the decisions on which the foreign titles of execution are based by the courts of the Federal Republic of Germany would bring the Federal Republic's legal cooperation relations to a standstill. There is, however, also a constitutionally founded interest of the Federal Republic of Germany in the maintenance of these relations, particularly with respect to its diverse international ties. Therefore, the minimum requirements arising under Art. 19(4), first sentence, of the Basic Law are primarily directed at the institutional and procedural structure of legal protection. From the standpoint of the Constitution, the executability of foreign titles may thus (also) be made available via the conclusion of treaties when, with respect to titles to be executed within the sovereign territory of the Federal Republic of Germany, the country awarding the title provided at least a measure of legal protection that satisfies certain minimum requirements regarding rule by law. This minimum includes the possibility of legal redress before independent, impartial tribunals, due process -- in particular, the guarantee of a legal hearing and qualified representation -- and adequate power by the courts to review and decide on the object of the action. In areas where this does not appear to be generally assured, the requirements of Art. 19(4), first sentence, of the Basic Law will normally only be able to be satisfied by way of a reservation by the German ordre public.
c) The minimum requirements that the Basic Law demands be observed have been satisfied in the case of the Austrian tax liability notices, in particular, on account of the provisions controlling in the proceedings below. This applies to both substantive and procedural law.
From the standpoint of substantive law, the tax claim in the proceeding below was based on revenue provisions that satisfy the strict demands of rule by law and were enacted under a constitutional order committed to basic and human rights. The regulatory scope of these provisions also does not go beyond that which, with respect to sufficient, material points of contact, is to be viewed as permissible under public international law.
In addition, the legal protection available in Austria against tax claims meets the procedural demands necessary to satisfy the minimum requirements for proceedings comporting with the principle of rule by law.
d) It must be added that in the case of the Legal Cooperation Treaty, the proviso of ordre public in Art. 4 of the Treaty enables the German recognition authorities and courts to deny the recognition and according to legal cooperation when -- on account of the general structure of the relevant Austrian provisions or their interpretation and application by Austrian officials -- it does not appear to be ensured that the according of legal cooperation is compatible with the German ordre public.
It has already been determined that in the proceedings below by the Complainant, the German authorities and courts did not make use of this proviso in an unconstitutional manner.
e) As viewed from the aspect of Art. 19(4), first sentence, of the Basic Law, it therefore appears to be compatible with the Basic Law that the German legislature decided to recognize executable Austrian tax liability titles without subjecting them to substantive review and to allow them to be executed. It is not correct that the German debtor is helplessly exposed to possible arbitrary tax seizures by a foreign State; on the contrary, the debtor here had ample opportunity to defend himself against tax liability demands that allegedly represented a violation of his basic rights. It is both correct and reasonable that in so doing he not limit himself to defensive actions before German authorities and courts but also, if necessary, make his plea in Austria. Especially in view of the decision by the Basic Law in favor of international cooperation and of the German interest under the Treaty in receiving legal cooperation in Austria as well, the recognition and execution of Austrian tax liability titles to the degree defined in the Legal Cooperation Treaty does not give rise to any objections under Art. 19(4), first sentence, of the Basic Law.
Pursuant to § 31(2) of the Federal Constitutional Court Act, the reviewed provisions are hereby declared to be compatible with the Basic Law.
Judges: Zeidler, Wand, Rottmann, Niebler (unable to take part in signature), Steinberger, Träger, Mahrenholz (unable to take part in signature)
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