OECD Arbitration in Tax Treaty Law

1. S. 712Introduction – why an International Tax Court?

International relations inevitably give rise to disputes between international actors. In many areas of international law, different mechanisms have been put into place to avoid and to settle potential conflicts. International tax law is not an exception, and an ‘amicable settlement’ of cross-border tax disputes regarding the interpretation and application of double tax agreements (‘DTAs’) between States was already proposed in the very first draft of a treaty model by the League of Nations in 1927. The idea was taken up by the OECD and the UN which included a mutual agreement procedure (‘MAP’) in their respective treaty models. A few years ago, the original classic version of the MAP procedure was improved by supplementing it with arbitration clauses. Although this step was seen as a major development towards a faster resolution of cross-border tax disputes, unanimity of the international community concerning the implementation of arbitration has not yet been achieved. The lack of consensus among States combined with a constant growth of complex international tax legislation play to the detriment of taxpayers who face a growing leve...