Article title Avoidance of the Law in German Legal Theory and Practice
Authors
Name of magazine Legal journal «Law of Ukraine» (Ukrainian version)
Issue 2/2018
Сторінки [199-216]
DOI https://doi.org/10.33498/louu-2018-02-199
Annotation

Within the last two decades, the European legislators (especially the German one) have identified problem regarding to avoiding of legislation and have expended their anti-avoidance legislation in many legal areas, especially in the areas of labour, inheritance, corporate, competition, tax, corporate and banking law. Nevertheless, the problem has not been solved in most of the South and Eastern European countries, so further research and development of this legal approach is highly recommended. This is an example when an individual conduct of contracting parties is viewed as a legal (lawful), but illegitimate (unjustified, unduly) dodging (i.e. avoidance) of provisions of the law in the previous mentioned laws. Consequently, the fight against illicit practices is not carried out through the provisions of the Criminal Code (since it is not case of an illegal act), but through anti-avoidance (anti-abuse) provisions that have the impact on preventing the legal effects of so-called avoidance transactions (Umgehungsgeschäfte). Avoidance (abuse) of the law (fraus legis) is defined as behaviour that is not directed against the strict sense (i.e. a letter) of the law, but violates its meaning. Fraus legis embodies in reality implemented transaction, but in a manner, which is contrary to the spirit of the law. In practice, an increasing number of cases in which persons, crossing (otherwise blurred) boundaries of lawful conduct, are using the (modified and misleading shapes of) transactions in order to achieve the economic benefits for one or both the parties in the transaction and on the other hand deceiving (and causing harm) to the counterparty or a third party. Defining the problem of the avoidance (and also sham) transaction is not a peripheral area of civil (and tax) law, but its very heart, which is reflected in destroying the essence of the transaction (i.e. the errors of the will) and unauthorized circumvention of the principle of party autonomy and the mandatory legal norms. The purpose of the research is reviewing and streamlining of the definition of avoidance of the law (fraus legis), especially in relation to the simulation, in order to develop a holistic view of how to understand this notion and its classification, as well as presenting its own vision of an optimal methodological basis for defining the civil concept of the avoidance of the law. This theoretical starting point is followed by the use of a practical demonstration of the avoidance of the law in various legal disciplines. The author aims at raising the awareness about the existing problem of abuse of law against which the responsible state authorities (state administration, inspections and police) and the judiciary (prosecutors and judges) are obliged to act in the event of violations of individual legal areas. It often happens that the competent institutions refer to a flat interpretation that they have not acted because there is no any explicitly prescribed measure or sanction in the law. It has to be stressed that there is no need to follow a strict formalism and to interpret the law literally (i.e. only by the letter of the law) but to follow the basic content of individual law and the intention of the legislature when writing this exact law. Although the legislator may have expressed itself linguistic incompletely when writing an individual law, that does not mean that there is a green light for contracting parties to exploit that defective expression of the legislator and to avoid the ban that the legislator wanted to impose. And awareness of this problem is already part of its solution. Fraus legis is a Roman legal concept that was shaped through centuries. In early middle ages the institut od avoidance of the law lost its momentum. Only in recent 100-150 years, fraus legis was introduced again first in civil law codifications and later in specific legal areas. It just shows how history comes around when searching for solutions that had already been solved. An optimal methodological basis for defining the concept of avoidance of the law will be its integrative legal model based on the protection of the rights and interests of the state (as a legislator) when the contracting parties show a different state of affairs, as is the case (which is especially the case in the fields of tax, labor and competition law). Avoidance of the law as a civil law concept points out that the contracting parties are breaking the spirit of material and procedural law, although it seems (at least the contracting parties claim so) that the law has not been violated in its text. The material and procedural aspects of the individual law have to take into account when judging whether the contracting parties bypassed (avoided) the content of the law (sententia) and the legislature will (voluntas). It is needed to stress that not only further development of legislation is needed but also open-minded way of thinking when tackling the problem of avoidance of the law, especially so-called professional courage of authorized personel of state administration and the judiciary.

 

Keywords fraus legis; agere in fraudem legis; avoidance of the law; abuse of the law; avoidance transaction; chain labour contracts; tax avoidance
References

Bibliography

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Thesis abstracts

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