Larsen, Petersen, Lise and Andersen v Province of Greenland

Date08 September 1983
CourtEastern Provincial Court (Denmark)
Denmark, Greenland Provincial Court.
Eastern Provincial Court.

(Fentz, Presiding Judge)

(Krog, Lune, Andreasen, Judges)

Larsen, Petersen, Lise and Andersen
Self-Governing Province of Greenland

Jurisdiction Foreign armed forces NATO military bases in Greenland Danish nationals living and working on bases Liability to taxation Whether subject to taxation by Greenland NATO Status of Forces Agreement, 1951 Article X Agreement between Governments of Denmark and United States of America concerning Defence of Greenland, 1951 Article VII Whether any conflict between provisions of the two Agreements concerning tax exemption

States Constituent territories Self-governing province Greenland Relationship with Denmark Application of treaties NATO Status of Forces Agreement, 1951 Denmark-United States Agreement concerning the Defence of Greenland, 1951

Treaties Interpretation Natural meaning Possible conflict between provisions of bilateral agreement and multilateral treaty involving the same parties Whether later provisions taking precedence Municipal legislation referring to bilateral agreement Interpretation by reference to earlier practice in application of bilateral agreement The law of Denmark

Summary: The facts:The applicants were Danish nationals who lived and worked on two United States air bases in Greenland, maintained as Defence Areas under the provisions of the Agreement (concluded pursuant to the nato Treaty, 1949) between the Governments of the United States of America and Denmark concerning the Defence of Greenland (the Defence Agreement) of 27 April 1951. Their employers were Danish companies servicing the air bases under contracts with the United States authorities. The applicants sought a declaration that they were exempt from Greenland taxation in accordance with Section 3(7) of Law No 5 of the Local Greenland Assembly. Greenland had become a self-governing province with effect from 1 January 1980 and the applicants argued that it was not decisive that persons employed on the bases who were Danish nationals had hitherto been regarded as liable to Danish income tax, because the compatibility of the provisions of Danish income tax law with the relevant international agreements had never been tested before the courts.

The applicants did not dispute the fact that, if Article X of the nato Status of Forces Agreement of 19 June 1951 (nato-sofa) were applicable to them, they would not be entitled to exemption. Article X only granted exemption from taxation in the receiving State to members of a force or civilian component. Under Article IX, civilian workers employed by a force or civilian component were not to be regarded, for any purpose, as members of that force or civilian component. But the applicants argued that the provisions in question of the nato-sofa, concluded less than two months after those of the Defence Agreement, had not been intended to supersede the more specific provisions of the earlier Agreement which had provided, in Article VII, that there was no liability to income tax on profits derived from contracts concluded with the United States authorities and concerning services or work carried out for the United States Government. The applicants placed decisive reliance on the statement, in Section 3(1)(7) of Local Greenland Assembly Law No 5, that persons affected by Article VII of the Defence Agreement were exempt from liability to tax.

Held (by the Greenland Provincial Court) (unanimously but with one judge dissenting from part of the reasoning):The application was rejected.

Majority reasoning: Section 3(1)(7) of Local Greenland Assembly Law No 5 was to be understood, on a simple reading, as a reference not only to Article VII of the Defence Agreement, but also to other provisions of that Agreement and, in particular, Article X which made provision for Article VII to be superseded by subsequent provisions agreed upon in a nato agreement, to the extent that such later provisions might be incompatible with the earlier ones. The provisions of the nato-sofa, concluded shortly after the Defence Agreement, were therefore decisive and the applicants were not entitled to exemption from taxation.

Minority reasoning. Section 3(1)(7) of Local Greenland Assembly Law No 5 placed decisive emphasis on the specific content of Article VII of the Defence Agreement, even though it was drafted at a time when the nato-sofa was already in force, so that the provisions of the later Agreement had to be regarded as irrelevant, whatever their content. But the applicants were indisputably employed by, and carried out work for, Danish firms and not the United States authorities so that they did not belong to the category of persons who were exempt from liability to taxation in the receiving State pursuant to Article VII of the Defence Agreement.

Held (by the Eastern Provincial Court):The appeal was dismissed.

The parties had agreed that the appellants did not satisfy the requirements for exemption from tax liability contained in Article X of the nato-sofa. Their legal position was therefore dependent upon whether or not they were to be considered as covered by the provisions of the Defence Agreement. According to a natural understanding of the provision in question, they could not be regarded as being employed by or under a contract with the Government of the United States of America. This conclusion was supported by the fact that at no time prior to 1 January 1980, when taxation affairs were transferred to the self-governing Province of Greenland, was it ever disputed that the category of Danish employees to which the applicants belonged were fully liable to Danish taxation.

The text of the judgment of the Eastern Provincial Court commences at p. 274. The following is the text of the judgment of the Greenland Provincial Court:

With effect from 1 January 1980, certain groups of persons resident within the areas of the American bases of Thule and...

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