Some of you know that the Israeli Supreme Court recently issued a temporary injunction preventing implementation of the U.S. FATCA law in Israel. See for example Forbes article.
On September 12, 2016 the Israeli Supreme Court, however, quashed the injunction.
Marc Zell, a counsel to the two petitioners (Republicans Overseas and Rina Schreiber) confirmed to me today (September 14) that they have no intention of giving up the FATCA litigation fight in Israel — which will continue. He also reminded me that the lawsuit is in fact still pending as the Israeli Supreme Court has not issued an opinion.
Two surprising statements made by the Justices deserve mention:
1) “Privacy in modern life is very limited,” said Justice Menahem Mazuz, one of three judges who ruled on the matter. “This is nothing new, the only change is that the regulations have now been codified into law.” [“The court ruled that the Israeli law, passed as part of an arrangement with the United States Treasury Department, did not violate Israel’s Basic Laws of Human Dignity and Liberty.”]
[Compare the above statement on privacy with a similar argument made by U.S. Treasury Department et al. against the plaintiffs of the U.S. FATCA lawsuit: “…there is no legitimate expectation of privacy concerning information kept in bank records, and the Sixth Circuit has repeatedly reaffirmed as much…”]
2) Justice Hanan Meltzer in part justified the law by noting its acceptance by the United States, saying this created a presumption of constitutionality.
“As long as the US law is in force, there is a presumption of constitutionality in regards to its purposes.” Above from: http://www.israelnationalnews.com/News/News.aspx/217717
As posted by badger at http://isaacbrocksociety.ca/fatca-and-israel/comment-page-1/#comment-8145088, the Israeli Supreme Court has now published the reasons for its decision:
http://www.loc.gov/law/foreign-news/article/israel-supreme-court-rejects-challenge-to-constitutionality-of-fatcas-implementation/
Thanks again to badger for finding this. Food for thought. 🙁
Anyone seen any tweets about this from Solomon Yue or anyone else from Republicans Overseas? (RO being one of the two petitioners)
Is RO still planning further anti-FATCA legal action in Israel?
I’m not surprised at Israel’s Supreme Court ruling. Israel would not want to cross Uncle Sam, its go-to man for military aid. It’s $8million dollars a day versus the FATCA discomfort of some of its citizens and the FATCA paper burden of its banks. Canada hardly gets a howdy-do from the USA so I expect better from our courts. We might not get better but I still have hope that the ADCS charter challenge will prevail.
EmBee – I agree. Canada and France are still in the running.
Israel is not, but we’ve known that for a while. It’s taken a long time for the Court to publish its reasons. Now that it has, it would be interesting to hear any comments from RO as to whether they still plan further litigation in Israel.
“1. Discrimination
Melcer rejected the claim that US account holders were discriminated against in comparison with those not subject to the reporting requirements. In his view, the information sharing with US tax authorities increases equal application of tax obligations, thereby eliminating the distinction between taxpayers who paid tax and those who evaded their tax obligations. (Id. ¶ 57.)”
Those are the only two categories? When my US income tax was US$0.00, which category was I in, those who paid tax or those who evaded their tax obligations?
If a dual US and Eritrean citizen in Israel owes US$0.00 but has reason to fear public disclosure of their bank account, … right, they’re evading tax obligations imposed by the Israel – Eritrea tax treaty, right?
The US puts FBAR in Title 31 not Title 26. The US says FBAR isn’t a tax obligation. How does the US feel about Israel’s Supreme Court ruling that FBAR is a tax obligation, impinging on US sovereignty?
“3. Right to Privacy
Determining that the Amendment Law harms account holders’ right to privacy, Melcer nevertheless concluded that the Amendment Law was constitutional as it complied with the requirements under section 8 of Basic Law: Human Dignity and Liberty (the limitation clause).”
Right, only humans have rights to human dignity and liberty. Dual US and Israeli citizens aren’t humans so they don’t have rights.
“(c) Proportionality
Melcer then addressed the issue of proportionality—namely, whether the Amendment Law exceeds what is required to reach its goals. He held that the Amendment Law was based on rational considerations and was drafted in a way that fulfills the main objective of FATCA. (Id. ¶¶ 72–76.)”
In other words, he avoided addressing the issue of proportionality. The Amedment Law is based on rational considerations and fulfils the main objective of FATCA, therefore there is no review of whether it exceeds what is required to meet its goals.
Remember people, sometimes courts are courts of law not courts of justice, but other times courts are courts of courts not courts of law.
Well said.
What he really meant by;”…The Amedment Law is based on rational considerations and fulfils the main objective of FATCA, therefore there is no review of whether it exceeds what is required to meet its goals.” is apparently that if the law “….fulfills the main objective…” of the laws of a foreign nation – the US, then that is sufficient to override any local national sovereignty and human or civil rights considerations. Cause the US carries a big stick and also dangles sufficient carrots.
badger – maybe this is why it took so long for them to explain their reasoning: there wasn’t any reasoning.
However. I suspect courts in most IGA Model 1 partner countries would fall back on these sorts of justifications, if push came to shove. They want FATCA because they consider it in the national interest to implement FATCA; the rest is verbiage.
Let’s hope Canada and/or France take a more thoughtful view.