OECD Arbitration in Tax Treaty Law

1. S. 110Introduction

1.1. Adoption of the Arbitration Clause

The United Nations Committee of Experts on Tax Matters started the discussion of supplementary mechanisms to aid in the resolution of mutual agreement procedures – MAP – in its fourth session in 2007. With the aid of the OECD and the European Union, the potential inclusion of a mandatory or voluntary arbitration clause in the UN Model Tax Convention was addressed in the next session of the committee.

As a consequence of the adoption of the mandatory arbitration clause by the 2008 OECD Model Tax Convention, the Fifth annual session of the UN Committee of Experts held in 2009 agreed to address the dispute resolution mechanisms taking into consideration “the specific needs and concerns of developing countries and countries in transition”. In this light, in the following year, the UN approved the inclusion of a mandatory arbitration clause as one alternative to support the resolution of MAP cases. The current wording of Article 25 Alternative B of the UN Model Tax Convention was inserted in the update made in 2011.

1.2. Relevance of the arbitration clause on the UN Model

The OECD Model Tax Convention and its arbitration clause had the ...