OECD Arbitration in Tax Treaty Law

1. S. 29Introduction

Currently, there is an extensive network of tax treaties between countries that facilitates international trade, movement of capital, goods etc. In recent decades many have pondered what an efficient tax dispute resolution procedure should look like. Arbitration has been put forward as a potential workable mechanism. Worldwide, there are now more than 150 treaties that contain an arbitration clause. They often follow the rule of the Article 25(5) of the OECD Model Tax Convention (OECD Model) or Article 25 of the UN Model Tax Convention (UN Model).

But arbitration has already been widely used in other state-to-state agreements. The experience from international trade and investment can provide a basis for discussions of how the tax world should approach the implementation of arbitration. Given that, this chapter will compare and contrast the arbitration clauses under the OECD and UN Models with arbitration clauses found in other agreements, namely bilateral investment agreements, trade agreements and the WTO Dispute Settlement Understanding. This chapter will address the difference between them and examine what can be learned from experiences in other fields, in order ...