Ancient and modern: Cicero on tax havens

David Cameron wants the international community to do something about big business avoiding paying tax. If only it were as simple as that.

Ancient philosophers, beginning with Aristotle (4th C BC), made a distinction between man-made law, which was peculiar to a state that made it and derived its validity simply from its adoption by that state, and natural law, which was universally valid. One could say that the former was right because it was law, the latter was law because it was right. Cicero (1st C BC) called this universal ‘world’ law ius naturale, identified it with divine reason and associated it with another concept, that of the ‘law of nations’, ius gentium. Fine for philosophers.

But in Institutes, a beginners’ teaching course in actual Roman law composed in about AD 160, Gaius maintained the distinction. His work begins with a statement that every people governed by statutes and customs observes both laws that are peculiar to itself, and laws that are common to all mankind (ius gentium). This latter he defines as the ‘law established by natural reason among mankind and followed by all people alike’. But this creates a problem: if the ius gentium was (as Gaius implied) the statute-based law ‘followed by all people alike’, was it the same as a universally valid, world-relevant ‘ius naturale’, which ought to be followed by all people alike? Romans never clarified this distinction between law that was actually applied and ‘world’ law as it ought to be. One consequence was that they never developed the notion that ius naturale, as a higher ‘world’ law, could in principle invalidate man-made law.

This contradiction is reflected in the current state of international law. It may represent working law between nations, but it is constantly coming up against a nation’s sovereign right to ignore it if it wants to.