OECD Arbitration in Tax Treaty Law

Ivo Grlica

1. S. 319Introduction

In recent years, so called “baseball”, or final offer arbitration, has proved to become a winning arbitration formula that is able to finally overcome traditional scepticism of States towards the adoption of mandatory binding arbitration in cross border tax matters. Having its roots in American major baseball leagues and following its, at first, timid adoption into several U.S. double tax treaties, this form of arbitration has been picked up by the OECD to become its preferred option under the MLI, thus continuing its successful march through the tax treaties.

This contribution examines the implementation of the baseball arbitration formula in the U.S. – Canada double taxation treaty compared to the baseball arbitration format as provided for by Part VI of the MLI. To this end, a broader overview of fundamental features of this type of arbitration and historical background will first be provided in the introductory part of the contribution (Section 2.) before analyzing baseball arbitration under both the U.S. treaties (Section 3.) and the MLI (Section 4.) in more detail. After providing a brief historical perspective and introduction to each, both systems will be ...