The International Law Commission initiated the work on the Vienna Convention on Law of Treaties in the year 1949 which was completed in the year 1969. It came into force in the year 1980. As of 2.8.2023, it was ratified by 116 Countries. It is an open treaty whereby any country can become a signatory of the Convention at any time.
Since a tax treaty is a part of international law, its interpretation should be based on a certain set of principles and rules of interpretation. The Vienna Convention on Law of Treaties provides the basic rules of interpretation of any international agreement (including a tax treaty). It represents the customary international law.
The VCLT codifies the principles of interpretation laid down by usage, custom, and courts over centuries. The principles engraved in the Vienna Convention on Law of Treaties have been acknowledged and embraced by the Indian courts of law while pronouncing their ruling.
Para 60 of the Supreme Court ruling in Ram Jethmalani & Ors. v. Union of India & Ors Writ Petition (Civil) No. 176/2009 reads as follows – “Article 31, “General Rule of Interpretation”, of the Vienna Convention of the Law of Treaties, 1969 provides that a “treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”
The Delhi High Court ruling in AWAS Ireland v. Directorate General of Civil Aviation (W.P.(C) 671/2005 delivered on 19th March 2015, applied the principles enshrined in the Vienna Convention of Law of Treaties, 1969. The said ruling invited reference to Article 51(c) of the Constitution of India which enjoins that the State shall endeavor to “foster respect for international law”.
The Court observed that the provisions of Article 51(c) of the Constitution of India when read with Articles 26, 27, and 31 of the Vienna Convention of Law of Treaties clearly cast an obligation on the Contracting States to not only remain bound by the terms of a treaty entered into by it but also obliges the State not to cite internal law as a justification for failure to perform its obligations under a treaty.
An international convention, i.e., a treaty, is required to be interpreted in good faith, in accordance with the ordinary meaning given to the terms of the treaty, in their context, and in light of its stated object and purpose.