AFRICA: Sub-Saharan Africa and international arbitration – how does that work?

COMMENT

Tax arbitration via new double tax treaties is on the increase. Hence, knowledge of international arbitration is important. Take a look at the following extract from the IBFD Book – Arbitration under Tax Treaties:

http://www.ibfd.org/sites/ibfd.org/files/content/pdf/ArbitrationunderTaxTreaties_sample.pdf

This will complement the provisions of the mutual agreement procedure, which correspond exactly to the wording of Article 25(1) to (4) OECD Model, by adding the following paragraph (5):

If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities within a period of two years after the question was raised pursuant to the previous paragraphs of this Article, the case shall , if all affected taxpayers agree, be submitted for arbitration by the competent authority that initiated the mutual agreement procedure. The arbitration board shall consist of one representative of each competent authority and one independent person per Contracting State taken from a list of arbitrators in the order of their nomination. The arbitrators shall elect a chairperson who must possess the qualifications required for appointment to the highest judicial of ices in his country or be a jurisconsult of recognized competence. Each Contracting State appoints five competent persons for the list of arbitrators.The taxpayer may at his request appear before the arbitration board. The arbitration board shall deliver its opinion not more than six months from the date on which the matter was referred to it. The decision of the arbitration board in a particular case shall be binding on both Contracting States and al taxpayers involved with respect to that case.(unofficial translation).

Text of Arbitration Provisions in Current Tax Treaties:

Double Taxation Convention Canada– South Africa, 27 November 1995

Article 24(6) If any question, difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved or dealt with by the competent authorities as a result of the application of the provisions of paragraphs 1, 2 or 3, these questions, difficulties or doubts may, if the competent authorities agree, be submitted to an arbitration commission. The decisions of the commission shall be binding on the competent authorities. The composition of the commission and the arbitration procedures shall be determined by the competent authorities.

	Netherlands – South Africa Income and Capital Tax Treaty (2005)
Country 1:	Netherlands
Country 2:	South Africa
Signed:	10 October 2005
Effective:	1 January 2009
Status:	In Force
Documents:	Netherlands – South Africa Income and Capital Tax Treaty (2005) (as amended through 2008) Netherlands – South Africa Income and Capital Tax Treaty (2005) Protocol to the 2005 Treaty (2008)

South Africa – Switzerland Income Tax Treaty (2007)

Country 1:South Africa
Country 2:Switzerland
Signed:8 May 2007
Effective:1 January 2010
Status:In Force
Documents:South Africa – Switzerland Income Tax Treaty (2007)

Guernsey – South Africa Exchange of Information Agreement (2011)

Country 1:Guernsey
Country 2:South Africa
Signed:21 February 2011
Effective:26 February 2012
Status:In Force
Documents:Guernsey – South Africa Exchange of Information Agreement (2011)

Double Taxation Convention Germany–USA, 29 August 1989

Article 25(5) Disagreements between the Contracting States regarding the interpretation or application of this Convention shall, as far as possible, be settled by the competent authorities. If a disagreement cannot be resolved by the competent authorities it may, if both competent authorities agree, be submitted for arbitration. The procedures shall be agreed upon and shall be established between the Contracting States by notes to be exchanged through diplomatic channels.

Protocol

24. With reference to paragraph 5 of Article 25 (Mutual Agreement Procedure): The decision of the arbitration board in a particular case shall be binding on both Contracting States with respect to that case.

25. With reference to paragraph 5 of Article 25 (Mutual agreement procedure) and Article 26 (Exchange of Information and Administrative Assistance): The Contracting States may release to the arbitration board such information as is necessary for carrying out the arbitration procedure, provided that the members of the arbitration board shall be subject to the limitations on disclosure described in Article 26.

Exchange of Notes, 29 August 1989

1. The competent authorities may agree to invoke arbitration in a specific case only after fully exhausting the procedures available under paragraphs 1 to 4 of Article 25, and if the taxpayer(s) consent(s) to the arbitration and agree(s) in writing to be bound by the arbitration decision. The competent authorities will not generally accede to arbitration with respect to matters concerning the tax policy or domestic tax law of either Contracting State.

2. The competent authorities shall establish an arbitration board for each specific case in the following manner:

(a)	An arbitration board shall consist of not less than three members. Each competent authority shall appoint the same number of members, and these members shall agree on the appointment of the other member(s).
(b)	The other member(s) of the arbitration board shall be from either Contracting State or from another OECD member country. The competent authorities may issue further instructions regarding the criteria for selecting the other member(s) of the arbitration board.
(c)	Arbitration board members (and their staffs) upon their appointment must agree in writing to abide by and be subject to the applicable confidentiality and disclosure provisions of both Contracting States and the Convention. In case those provisions conflict, the most restrictive condition will apply.

3. The competent authorities may agree on and instruct the arbitration board regarding specific rules of procedure, such as appointment of a chairman, procedures for reaching a decision, establishment of time limits, etc. Otherwise, the arbitration board shall establish its own rules of procedure consistent with generally accepted principles of equity.

4. Taxpayers and/or their representatives shall be afforded the opportunity to present their views to the arbitration board.

5. The arbitration board shall decide each specific case on the basis of the Convention, giving due consideration to the domestic laws of the Contracting States and the principles of international law. The arbitration board will provide to the competent authorities an explanation of its decision. The decision of the arbitration board in a particular case shall be binding on both Contracting States and the tax payer(s) with respect to that case. While the decision of the arbitration board shall not have precedential effect, it is expected that such decisions ordinarily will be taken into account in subsequent competent authority cases involving the same taxpayer(s), the same issue(s), and substantially similar facts, and may also be taken into account in other cases where appropriate.

6. Costs for the arbitration procedure will be borne in the following manner:

(a)	each Contracting State shall bear the cost of remuneration for the member(s) appointed by it, as well as for its representation in the proceedings before the arbitration board;
(b)	the cost of remuneration for the other member(s) and all other costs of the arbitration board shall be shared equally between the Contracting States; and
(c)	the arbitration board may decide on a different allocation of costs.

However, if it deems appropriate in a specific case, in view of the nature of the case and the roles of the parties, the Competent Authority of a Contracting State may require the taxpayer(s) to agree to bear that Contracting State’s share of the costs as a prerequisite for arbitration.

7. The competent authorities may agree to modify or supplement these procedures; however, they shall continue to be bound by the general principles established herein.

Double Taxation Convention Germany–France, as amended by Protocol of 28 September 1989

Article 25a

(1) Where, in cases referred to in Article 25, the competent authorities fail to reach an agreement within 24 months from the day the taxpayer has presented his case, they may agree to invoke an arbitration commission.

(2) Such commission shall be established for each specific case as follows: Each of the Contracting States shall appoint one member and these two members shall appoint, by mutual agreement, a national of a third State who shall be appointed chairman. All members must be appointed within three months from the day the competent authorities agreed to present the case to the arbitration commission.

(3) Where the time limits referred to in paragraph 2 are not observed and no other arrangement is made, each of the Contracting States may call upon the Secretary General of the Permanent Court of Arbitration to implement the necessary appointments.

(4) The arbitration commission shall resolve the disagreement in accordance with the rules of international law and, especially, the provisions of this Convention. It shall establish its own rules of procedure. The taxpayer shall be afforded the opportunity to be heard before the commission or to submit his claims in writing.

(5) The decisions of the arbitration commission shall be made by the majority of votes of the members and they shall be binding. The absence of, or abstention from voting by, one of the members appointed by the Contracting States shall not prevent the commission from making a decision. In case of a tie, the chairman’s vote is decisive.

Double Taxation Convention Netherlands– Venezuela, 29 May 1991

Article 29(5) If after the procedures of paragraphs 1 to 4 any dispute arising as to the interpretation or application of the Convention in a particular case cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure, the case may, if both competent authorities agree, be resolved peacefully according to any internationally accepted procedures. These procedures shall be established between the competent authorities of the Contracting States.

Double Taxation Convention Germany–Sweden, 14 July 1992

Article 36(3) Where an act of assistance concerns circumstances covered by Chapters II, III and IV it can be made dependent on an agreement on arbitration proceedings within the sense of the second sentence of paragraph 5 of Article 41.

Article 41(5) The provisions of Chapters I, II and IV of the European Convention on the Peaceful Settlement of Disputes of 29 April 1957 shall be applied to settle international conflicts arising under this Convention. Notwithstanding the procedure provided therein, the Contracting States may agree, however, to submit a dispute to an arbitration tribunal, whose decision shall be binding. Such court of arbitration shall be composed of professional judges of the Contracting States, third States or international organizations. Its proceedings shall follow internationally recognized principles. The persons concerned in the case shall have the full right to be heard and to submit their own requests. The decision of the court shall be made on the basis of the provisions of agreements in force between both Contracting States and of the general international law; a decision ex aequo et bono shall not be allowed. As long as no agreement has been reached to resort to a court of arbitration and on its composition and procedures, each Contracting State may proceed in accordance with the first sentence.

Double Taxation Convention Mexico–USA, 18 September 1992

Article 26(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer(s) agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels. The provisions of this paragraph shall have effect after the States have so agreed through the exchange of diplomatic notes.

Exchange of Notes, 18 September 1992

18. With reference to paragraph 5 of Article 26 (Mutual agreement procedure):

(a)

After a period of three years after the entry into force of this Convention, the competent authorities shall consult in order to determine whether it is appropriate to make the exchange of diplomatic notes referred to in paragraph 5 of Article 26 (Mutual agreement procedure).

(b)

If the competent authorities of both States agree to submit a disagreement regarding the interpretation or application of this Convention in a specific case to arbitration according to paragraph 5 of Article 26, the following procedures will apply:

(i)

If, in applying paragraphs 1 to 4 of Article 26, the competent authorities fail to reach an agreement within two years of the date on which the case was submitted to one of the competent authorities, they may agree to invoke arbitration in a specific case, but only after fully exhausting the procedures available for paragraphs 1 to 4 of Article 26. The competent authorities will not accede to arbitration with respect to matters concerning the tax policy or domestic law of either State.

(ii)

The competent authorities shall establish an arbitration board for each specific case in the following manner:

A.	An arbitration board shall consist of not fewer than three members. Each competent authority shall appoint the same number of members, and these members shall agree on the appointment of the other member(s). The competent authorities may issue further instructions regarding the criteria for selecting the other member(s) of the arbitration board.
B.	Arbitration board member(s) (and their staffs) upon their appointment must agree in writing to abide by and be subject to the applicable confidentiality and disclosure provisions of both States and the Convention. In case those provisions conflict, the most restrictive condition will apply.

(iii)

The competent authorities may agree on and instruct the arbitration board regarding specific rules of procedure, such as appointment of a chairman, procedures for reaching a decision, establishment of time limits, etc. Otherwise, the arbitration board shall establish its own rules of procedure consistent with generally accepted principles of equity.

(iv)

Taxpayers and/or their representatives shall be afforded the opportunity to present their views to the arbitration board.

(v)

The arbitration board shall decide each specific case on the basis of the Convention, giving due consideration to the domestic laws of the States and the principles of international law. The arbitration board will provide to the competent authorities an explanation of its decision. The decision of the arbitration board shall be binding on both States and the taxpayer(s) with respect to that case. While the decision of the arbitration board shall not have precedential effect, it is expected that such decisions ordinarily will be taken into account in subsequent competent authority cases involving the same taxpayer(s), the same issue(s), and substantially similar facts, and may also be taken into account in other cases where appropriate.

(vi)

Costs for the arbitration procedure will be borne in the following manner:

A.	each State shall bear the cost of remuneration for the member(s) appointed by it, as well as for its representation in the proceedings before the arbitration board;
B.	the cost of remuneration for the other member(s) and all other costs of the arbitration board shall be shared equally between the States; and
C.	the arbitration board may decide on a different allocation of costs. However, if it deems appropriate in a specific case, in view of the nature of the case and the roles of the parties, the competent authority of one of the States may require the taxpayer(s) to agree to bear that State’s share of the costs as a prerequisite for arbitration.

(vii)

The competent authorities may agree to modify or supplement these procedures; however, they shall continue to be bound by the general principles established herein.

Double Taxation Convention Netherlands–USA, 18 December 1992

Article 29(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities in a mutual agreement procedure pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer(s) agree, be submitted for arbitration, provided the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The provisions of this paragraph shall have effect after the States have so agreed through the exchange of diplomatic notes.

Article 30(3) The States may release to the arbitration board, established under the provisions of paragraph 5 of Article 29 (Mutual agreement procedure), such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Article 32 (Limitation of Articles 30 and 31) and to paragraph 2 of this Article. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Canada– Netherlands, as amended by Protocol of 4 March 1993

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities it may, if both competent authorities agree, be submitted for arbitration. The procedures for arbitration shall be established between the competent authorities.

Double Taxation Convention Kazakhstan–USA, 24 October 1993

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer(s) agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels. After a period of three years after the entry into force of this Convention, the competent authorities shall consult in order to determine whether it is appropriate to make the exchange of diplomatic notes. The provisions of this paragraph shall have effect after the States have so agreed through the exchange of diplomatic notes.

Exchange of Notes, 10 July 1995

I have the honor to refer to the Convention between the Government of the United States of America and the Government of the Republic of Kazakhstan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, together with a related Protocol, signed at Almaty on October 24, 1993, and Exchanges of Notes (“Taxation Convention”) and the General Agreement on Trade in Services (“GATS”). The Government of the United States is a Party to the GATS, annexed to the Agreement Establishing the World Trade Organization, done at Marrakesh April 15, 1994. The Government of Kazakhstan is not yet a Party to the GATS. The United States and Kazakhstan have, however, considered the relationship between the Taxation Convention and the GATS in the event that the GATS applies between them, particularly with regard to the Consultation provision in Article XXII of the GATS and the Most-Favored-Nation and National Treatment provisions in Articles II and XVII of the GATS. In addition, the United States and Kazakhstan have considered the relationship between the Taxation Convention and other agreements that apply between them and that have provisions concerning national treatment or most-favored-nation treatment.

To address these issues, I have the honor to propose that:

(1)

notwithstanding Article XXII and footnote 11 of the GATS, in the event that the GATS applies between the United States and Kazakhstan, a dispute concerning whether a measure is within the scope of the Taxation Convention shall be considered only pursuant to Article 25 (Mutual agreement procedure) of the Taxation Convention by the competent authorities of the United States and Kazakhstan as defined in subparagraph 1(h) of Article 3 (General definitions); and

(2)

unless the competent authorities determine that a taxation measure is not within the scope of the Taxation Convention, national treatment or most-favored-nation obligations under any other agreement (including GATS in the event that it applies between the United States and Kazakhstan) shall not apply to a taxation measure, except for such national treatment or mostfavored-nation obligations as may apply to trade in goods under the Agreement on Trade Relations between the United States and Kazakhstan, signed on May 19, 1992, and the General Agreement on Tariffs and Trade if it applies between the United States and Kazakhstan.

Exchange of Notes Azerbaijan–UK, 23 February 1994

Article 26 (Mutual agreement procedure): With reference to paragraph 2, the Government of the United Kingdom takes note of the view of the Government of Azerbaijan that provision should be made for a procedure of binding arbitration with a view to the avoidance of taxation which is not in accordance with the Convention where one of the competent authorities fails to resolve the case by mutual agreement with the competent authority of the other Contracting State. In the event of a change in the domestic law of the United Kingdom to permit such a procedure of binding arbitration to be entered into, the competent authority of the United Kingdom will notify the competent authority of Azerbaijan with a view to the negotiation of a Protocol to this Convention which will provide for a binding arbitration procedure.

Double Taxation Convention Latvia–Netherlands, 14 March 1994

Article 27(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure pursuant to the previous paragraphs of this Article within a period of two years after the question was raised, the case may, at the request of either Contracting State, be submitted for arbitration, but only after fully exhausting the procedures available under paragraphs 1 to 4 of this Article and provided the competent authority of the other Contracting State agrees and the taxpayer or taxpayers involved agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case.

Article 28(2) The Contracting States may release to the arbitration board, established under the provisions of paragraph 5 of Article 27, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Article 30. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Mexico–UK, 2 June 1994

Article 26(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, subject to procedures to be established between the Contracting States by notes to be exchanged through diplomatic channels, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case.

Double Taxation Convention France–USA, 31 August 1994

Article 26(6) If an agreement cannot be reached by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The competent authorities may release to the arbitration board such information as is necessary for carrying out the arbitration procedure. The decision of the arbitration board shall be binding on the taxpayer and on both States with respect to that case. The procedures, including the composition of the board, shall be established between the Contracting States by notes to be exchanged through diplomatic channels after consultation between the competent authorities. The provisions of this paragraph shall not have effect until the date specified in the exchange of diplomatic notes.

Protocol Italy–Kazakhstan, 22 September 1994

8. With regard to Article 25: If any difficulty or doubt arising as to the interpretation of the Convention cannot be resolved by the competent authorities pursuant to Article 25, the case may, if both competent authorities and the taxpayer(s) agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States, if appropriate, pursuant to paragraph 4 of Article 15, and by notes exchanged between the two competent authorities. The provisions of this paragraph shall have effect after the competent authorities have so agreed through exchange of notes.

Double Taxation Convention Mexico–Singapore, 9 November 1994

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Agreement cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels.

Double Taxation Convention Canada–USA, as amended by Protocol of 17 March 1995

Article 24(6) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities pursuant to the preceding paragraphs of this

Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established in an exchange of notes between the Contracting States. The provisions of this paragraph shall have effect after the Contracting States have so agreed through the exchange of notes.

Double Taxation Convention Kazakhstan– Pakistan, 23 August 1995

Article 25(4) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer(s) agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels. After a period of three years after the entry into force of this Convention, the competent authorities shall consult in order to determine whether it is appropriate to make the exchange of diplomatic notes. The provisions of this paragraph shall have effect after the States have so agreed through the exchange of diplomatic notes.

Double Taxation Convention Netherlands– Ukraine, 24 October 1995

Article 27(5) If after the procedures of paragraphs 1 to 4 of this Article any dispute arising as to the interpretation or application of the Convention in a particular case cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure, the case may, if both competent authorities agree be resolved through an arbitration board created by the competent authorities and supplemented by independent persons and according to internationally accepted arbitration procedures. These procedures shall by mutual agreement be established between the competent authorities of both Contracting States. The decision of the arbitration board shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case. This paragraph will only apply after the competent authorities of both Contracting States have established the above-mentioned procedures.

Article 28(2) The Contracting States may release to the arbitration board, established under the provisions of paragraph 5 of Article 27 of this Convention, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Article 30 of this Convention. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Ireland–Israel, 20 November 1995

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States with respect to that case. The procedures shall be established between the Contracting States by notes to be exchanged through diplomatic channels. The provisions of this paragraph shall have effect when the Contracting States have so agreed through the exchange of diplomatic notes.

Double Taxation Convention Canada–France, as amended by Protocol of 30 November 1995

Article 25(5) If any question, difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved or dealt with by the competent authorities as a result of the application of the provisions of paragraphs 1, 2 or 3, these questions, difficulties or doubts may, if the competent authorities agree, be submitted to an arbitration commission. The decisions of the commission shall have the force of law. The composition of the commission and the arbitration procedures shall be determined, after consultation between the competent authorities, through an exchange of diplomatic notes between the Contracting States. The provisions of this paragraph shall take effect from the date agreed to in the exchange of diplomatic notes.

Protocol Finland–Netherlands, 28 December 1995

XII. (Ad Article 26): If, in an Agreement for the avoidance of double taxation that is subsequently concluded between Finland and a third State being a member of the Organisation for Economic Cooperation and Development, there are included provisions on arbitration, the Government of the Republic of Finland shall without undue delay inform the Government of the Kingdom of the Netherlands in writing through the diplomatic channel and shall enter into negotiations with the Government of the Kingdom of the Netherlands with a view to including such provisions in the Agreement signed today with the Netherlands.

Double Taxation Convention Kazakhstan– Netherlands, 24 April 1996

Article 27(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities within a period of two years pursuant to the previous paragraphs of this Article, the case may, if the taxpayer(s) agree(s), be submitted for arbitration, provided the taxpayer(s) agree(s) in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States with respect to that case. The procedures shall be established through diplomatic channels. After a period of three years after the entry into force of this Convention, the competent authorities shall consult in order to determine whether it is appropriate to make the exchange of diplomatic notes. The provisions of this paragraph shall have effect after the States have so agreed through the exchange of diplomatic notes.

Double Taxation Convention Canada– Kazakhstan, 25 September 1996

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels. After a period of three years after the entry into force of this Convention, the competent authorities shall consult in order to determine whether it is appropriate to make the exchange of diplomatic notes. The provisions of this paragraph shall have effect after the States have so agreed through the exchange of diplomatic notes.

Double Taxation Convention Switzerland–USA, 2 October 1996

Article 25(6) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities in a mutual agreement procedure pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and all affected taxpayers agree, be submitted for arbitration, provided the taxpayers agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States with respect to that case. The procedures shall be established in an exchange of notes between the Contracting States. The provisions of this paragraph shall have effect after the Contracting States have so agreed through the exchange of diplomatic notes.

Article 26(4) The competent authorities may release to an arbitration board established pursuant to paragraph 6 of Article 25 (Mutual agreement procedure) such information as is necessary for carrying out the arbitration procedure. The members of the arbitration board shall be subject to the limitations on disclosure described in this Article.

Double Taxation Convention Netherlands– Russia, 16 December 1996

Article 26(5) If after the procedures of paragraphs 1 to 4 any dispute arising as to the interpretation or application of the Agreement in a particular case cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure, the case may, if both competent authorities agree be resolved through an arbitration board created by the competent authorities and supplemented by independent persons and according to internationally accepted arbitration procedures. These procedures shall by mutual agreement be established between the competent authorities of both Contracting States. The decision of the arbitration board shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case. This paragraph will only apply after the competent authorities of both Contracting States have established the above-mentioned procedures. The Contracting States may release to the arbitration board, established under the provisions of this paragraph, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Articles 27 and 29.

Double Taxation Convention Mexico–Venezuela, 6 February 1997

Article 24(5) Notwithstanding the provisions of an international treaty with respect to trade or investment to which the Contracting States are or may be parties, any issue as to the actions of a Contracting State regarding the taxes referred to in Article 2 or, in the case of non-discrimination, any tax action of a Contracting State, including a dispute over whether this Convention applies, shall be settled under the Convention, unless the competent authorities of the Contracting States otherwise agree.

Article 24(6) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayers involved agree, be submitted for arbitration, provided that the taxpayers involved agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels.

Double Taxation Convention Estonia– Netherlands, 14 March 1997

Protocol

XIII. Ad Article 27, paragraph 5, and Articles 28 and 29: With respect to the provisions of arbitration, exchange of information and assistance in recovery, the competent authorities of the Contracting States may, by common agreement, prescribe rules concerning matters of procedure, forms of application and replies thereto, disposition of amounts collected, minimum amounts to collection and related matters.

Double Taxation Convention Canada–Iceland, 9 June 1997

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities pursuant to the preceding paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedure shall be established in an exchange of notes between the Contracting States.

Double Taxation Convention Ireland–USA, 28 July 1997

Article 26(5) If an agreement cannot be reached by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The competent authorities may release to the arbitration board such information as is necessary for carrying out the arbitration procedure. The decision of the arbitration board shall be binding on the taxpayer and on both States with regard to that case. The procedures, including the composition of the board, shall be established between the Contracting States by notes to be exchanged through diplomatic channels after consultation between the competent authorities. The provisions of this paragraph shall not have effect until the date specified in the exchange of diplomatic notes.

Double Taxation Convention Iceland– Netherlands, 25 September 1997

Article 27(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities in a mutual agreement procedure pursuant to the preceding paragraphs of this Article within a period of two years after the question was raised, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedure shall be established in mutual agreement between the competent authorities of the Contracting States.

Article 28(3) The Contracting States may release to the arbitration board, established under the provisions of paragraph 5 of Article 27, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of paragraph 2 of this Article. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Canada–Chile, 21 January 1998

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities the case may, if the competent authorities of both Contracting States so agree, be submitted for arbitration. The procedure shall be agreed upon and shall be established between the Contracting States by notes to be exchanged through diplomatic channels.

Double Taxation Convention Chile–Mexico, 17 April 1998

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities of the Contracting States, the case may, if both competent authorities agree, be submitted for arbitration. The procedure shall be agreed upon under the basic international principles of arbitration and shall be established between the Contracting States by notes to be exchanged through diplomatic channels. The Contracting States may submit for arbitration, as established in this paragraph, such information as is necessary to comply with this procedure, but are bound to the limitation of not disclosing the information referred to in paragraph 1 of Article 26.

Double Taxation Convention Macedonia– Netherlands, 11 September 1998

Article 27(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure pursuant to the previous paragraphs of this Article within a period of two years after the question was raised, the case may, at the request of either Contracting State, be submitted for arbi tration, but only after fully exhausting the procedures available under paragraphs 1 to 4 of this Article and provided the taxpayer or taxpayers involved agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case.

Double Taxation Convention Ireland–Mexico, 22 October 1998

Article 24(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels. The provisions of this paragraph shall have effect when the States have so agreed through the exchange of diplomatic notes.

Article 24(6) Notwithstanding any international agreement on trade or investment to which both Contracting States are or may become parties,

(a)	the provisions of this Article exclusively shall apply to any dispute concerning whether a measure is within the scope of this Convention, and the procedures under this Convention exclusively shall apply to that dispute; and
(b)	unless the competent authorities determine that a taxation measure is not within the scope of this Convention, the non-discrimination obligations of this Convention exclusively shall apply with respect to that measure.

Double Taxation Convention Egypt–Netherlands, 21 April 1999

Article 25(6) If any difficulty or doubt arising as to the interpretation or application of the Agreement cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure pursuant to the previous paragraphs of this Article within a period of five years after the question was raised, the case may, at the request of either Contracting State, be submitted for arbitration, but only after fully exhausting the procedures available under paragraphs 1 to 4 of this Article and provided the taxpayer or taxpayers involved agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case. The application of the provisions of this paragraph shall be subject to mutual agreement between the competent authorities of the Contracting States.

Article 26(2) The Contracting States may release to the arbitration board, established under the provisions of paragraph 6 of Article 25, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Article 28. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Lithuania– Netherlands, 16 June 1999

Article 28(2) The Contracting State may release to the arbitration board, established under the provisions of paragraph 5 of Article 27, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Article 30. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Protocol

XII. (Ad Article 27, paragraph 5, and Articles 28 and 29): With respect to the provisions of arbitration, exchange of information and assistance in recovery, the competent authorities of the Contracting States may, by common agreement, prescribe rules concerning matters of procedure, forms of application and replies thereto, disposition of amounts collected, minimum amounts to collection and related matters.

Double Taxation Convention Israel–Mexico, 20 July 1999

Article 26(5) Notwithstanding any other treaty, agreement or convention to which the Contracting States are parties, any tax issue between the Contracting States, including a dispute over whether this Convention applies, shall be settled only under this Article unless the competent authorities agree otherwise.

Article 26(6) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities of the Contracting States pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted to arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels.

Double Taxation Convention Italy–USA, 25 August 1999

Article 25(5) If an agreement cannot be reached by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The competent authorities may release to the arbitration board such information as is necessary for carrying out the arbitration procedure. The award of the arbitration board shall be binding on the taxpayer and on both States with regard to that case. The procedures shall be finalized by the Contracting States by means of notes to be exchanged through diplomatic channels after consultation between the competent authorities. The provisions of this paragraph shall not have effect until the date specified in the exchange of diplomatic notes.

Double Taxation Convention Chile–Ecuador, 26 August 1999

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities of the Contracting States, the case may, if the competent authorities of both Contracting States so agree, be submitted for arbitration. The procedures shall be agreed upon and shall be established between the Contracting States by notes to be exchanged through diplomatic channels. The decision of the arbitration board on a particular case shall, subject to the procedure agreed upon between the parties, be binding on both States with respect to that case, but shall not have a retroactive effect.

Double Taxation Convention Kazakhstan– Switzerland, 21 October 1999

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer(s) agree, be submitted for arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States with respect to that case. The procedures shall be established between the States by notes to be exchanged through diplomatic channels. After a period of three years after the entry into force of this Convention, the competent authorities shall consult in order to determine whether it is appropriate to make the exchange of diplomatic notes. The provisions of this paragraph shall have effect after the Contracting States have so agreed through the exchange of diplomatic notes.

Double Taxation Convention Chile–Poland, 10 March 2000

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities, the case may, if the competent authorities of both Contracting States so agree, be submitted for arbitration. The procedures shall be agreed upon and shall be established between the Contracting States by notes to be exchanged through diplomatic channels.

Double Taxation Convention Croatia– Netherlands, 23 May 2000

Article 26(5) If after the procedures of paragraphs 1 to 4 any dispute arising as to the interpretation or application of the Agreement in a particular case cannot be resolved by the competent authorities of the Contracting State in a mutual agreement procedure, the case may, if both competent authorities agree, be resolved through an arbitration board created by the competent authorities and supplemented by independent persons and according to internationally accepted arbitration procedures. These procedures shall by mutual agreement be established between the competent authorities of both Contracting States. The decision of the arbitration board shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case. This paragraph will only apply after the competent authorities of both Contracting States have established the above-mentioned procedures.

Article 27(2) The Contracting States may release to the arbitration board, established under the provisions of paragraph 5 of Article 26, such information as is necessary for carrying out the arbitration procedure. Such release of information shall be subject to the provisions of Article 29. The members of the arbitration board shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Moldavia– Netherlands, 3 July 2000

Article 26(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure pursuant to the previous paragraphs of this Article within a period of two years after the question was raised, the case may, at the request of either Contracting State, be submitted for arbitration, but only after fully exhausting the procedures available under paragraphs 1 to 4 of this Article and provided the taxpayer or taxpayers involved agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case.

Article 27(1) The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals or the arbitration procedure as meant in paragraph 5 of Article 26 in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

Double Taxation Convention Azerbaijan–Austria, 4 July 2000

Article 25(5) If after the procedures of paragraphs 1 to 4 any dispute arising as to the interpretation or application of the Convention in a particular case cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure, the case may, if both competent authorities agree, be resolved peacefully according to any internationally accepted procedure. These procedures shall be established between the competent authorities of the Contracting States.

Double Taxation Convention Austria–Germany, 20 August 2000

Article 25(5) If any difficulty or doubt arising as to the interpretation or application of this Convention cannot be resolved by the competent authorities in a mutual agreement procedure within a period of three years after the question was raised pursuant to the previous paragraphs of this Article, on request of the person mentioned in paragraph 1 the Contracting States shall be obliged to submit the case for arbitration to the Court of Justice of the European Communities pursuant to Article 239 EC Treaty.

Double Taxation Convention Italy–Lebanon, 22 November 2000

Article 25(5) In the cases provided for in the preceding paragraphs, if the competent authorities of the Contracting States do not reach an agreement for the avoidance of double taxation within two years from the date on which the case has been first presented to one of them, and the taxpayer(s) agree(s) to be bound by the decision of an arbitration board, the competent authorities may establish such an arbitration board for each specific case, which is entrusted with giving an expert opinion on the method for the elimination of double taxation. The board can only be established if the parties concerned previously waive – without any reservations or conditions – the pending legal proceedings at the domestic court.

The arbitration board shall consist of three members appointed in the following manner: Each competent authority shall appoint a member and the two members shall appoint by mutual agreement the chairman who shall be chosen among independent experts from either Contracting State or from another OECD member country.

When giving its opinion, the arbitration board shall apply the provisions of this Convention and principles of international law, taking into account the domestic laws of the Contracting States. The arbitration board shall establish its own rules of procedure.

The person concerned may upon request be heard or be represented before the arbitration board and, when requested by the board, such person shall appear before it or appoint a representative for such purpose.

Article 25(6) The opinion of the arbitration board shall be given within six months from the date on which the case has been presented. The board shall rule with a majority vote of its members. In case of divergence of the voting of the members appointed by each competent authority, the chairman’s vote shall prevail.

Article 25(7) Each Contracting State shall bear the cost of the arbitrator it has appointed and of its representation in the arbitral proceedings. The cost of the chairman and the remaining costs shall be borne in equal parts by the Contracting States. The arbitration board may make a different regulation concerning costs.

Double Taxation Convention Luxembourg– Mexico, 7 February 2001

Article 9(4) If any difficulty cannot be resolved by the competent authorities of the Contracting States pursuant to the previous paragraphs of this Article, the case may, if both competent authorities and the taxpayer agree, be submitted to arbitration, provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board.

Protocol

With reference to paragraph 4 of Article 9: If the competent authorities of both States agree to submit a disagreement regarding the interpretation or application of this Convention in a specific case to arbitration according to paragraph 4 of Article 9, the following procedures will apply:

(i)

If, in applying paragraphs 1 to 3 of Article 9, the competent authorities fail to reach an agreement within two years of the date on which the case was submitted to one of the competent authorities, they may agree to invoke arbitration in a specific case, but only after fully exhausting the procedures available for paragraphs 1 to 3 of Article 9. The competent authorities will not accede to arbitration with respect to matters concerning the tax policy or domestic law of either State.

(ii)

The competent authorities shall establish an arbitration board for each specific case in the following manner:

A.	An arbitration board shall consist of not fewer than three members. Each competent authority shall appoint the same number of members, and these members shall agree on the appointment of the other member(s). The competent authorities may issue further instructions regarding the criteria for selecting the other member(s) of the arbitration board.
B.	Arbitration board member(s) (and their staff) upon their appointment must agree in writing to abide by and be subject to the applicable confidentiality and disclosure provisions of both States and the Convention. In case those provisions conflict, the most restrictive condition will apply.

(iii)

(iv)

Taxpayers and/or their representatives shall be afforded the opportunity to present their views to the arbitration board.

(v)

(vi)

Costs for the arbitration procedure will be borne in the following manner:

A.	each State shall bear the cost of remuneration for the member(s) appointed by it, as well as for its representation in the proceedings before the arbitration board;
B.	the cost of remuneration for the other member(s) and all other costs of the arbitration board shall be shared equally between the States; and
C.	the arbitration board may decide on a different allocation

of costs. However, if it deems appropriate in a specific case, in view of the nature of the case and the roles of the parties, the competent authority of one of the States may require the taxpayer(s) to agree to bear that State’s share of the costs as a prerequisite for arbitration.

(vii)

The competent authorities may agree to modify or supplement these procedures; however, they shall continue to be bound by the general principles established herein.

Double Taxation Convention Canada–Germany, 29 April 2001

Article 25(6) If any question, difficulty or doubt arising as to the interpretation or application of the Agreement cannot be resolved or dealt with by the competent authorities as a result of the application of the provisions of paragraphs 1, 2 or 3, these questions, difficulties or doubts may, if the competent authorities agree, be submitted to an arbitration commission. The decisions of the commission shall be binding. The composition of the commission and the arbitration procedures shall be determined, after consultation between the competent authorities, through an exchange of diplomatic notes between the Contracting States.

Double Taxation Convention Kuwait– Netherlands, 29 May 2001

Article 26(5) If any difficulty or doubt arising as to the interpretation or application of this Agreement cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure pursuant to the previous paragraphs of this Article within a period of two years after the question was raised, the case may, at the request of either Contracting State, be submitted for arbitration on a case by case basis, unless the competent authorities agree on an alternative settlement procedure and provided the taxpayer or taxpayers involved agree in writing to be bound by the decision of the arbitration panel. The decision of the arbitration panel in a particular case shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case.

Article 27(3) The Contracting States may release to the arbitration panel, established under the provisions of paragraph 5 of Article 26, such information as is necessary for carrying out the arbitration procedures. Such release of information shall be subject to the provisions of paragraph 2 of this Article. The members of the arbitration panel shall be subject to the limitations on disclosure described in paragraph 1 of this Article with respect to any information so released.

Double Taxation Convention Canada–Ecuador, 28 June 2001

Article 24(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities pursuant to the preceding paragraphs of this Article, and the difficulty or doubt is the result of an assessment by one or both Contracting States, the case may, if both competent authorities and the taxpayer agree, be submitted for arbitration provided that the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedure shall be established in an exchange of notes between the Contracting States.

Double Taxation Convention Canada–Peru, 20 July 2001

Article 25(6) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities pursuant to the preceding paragraphs of this Article, the case may be submitted for arbitration if both competent authorities and the taxpayer agree and the taxpayer agrees in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both States with respect to that case. The procedure shall be established in an exchange of notes between the Contracting States.

Double Taxation Convention Netherlands– Uzbekistan, 18 October 2001

Article 27(5) If any difficulty or doubt arising as to the interpretation or application of the Convention cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure pursuant to the previous paragraphs of this Article within a period of two years after the question was raised, the case may, at the request of either Contracting State, be submitted for arbitration, but only after fully exhausting the procedures available under paragraphs 1 to 4 of this Article and provided the taxpayer or taxpayers involved agree in writing to be bound by the decision of the arbitration board. The decision of the arbitration board in a particular case shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case. This paragraph will only apply after the competent authorities of both Contracting States have in mutual agreement established internationally accepted procedures for applying the above-mentioned arbitration.

Double Taxation Convention Armenia– Netherlands, 31 October 2001

Article 27(5) If after the procedures of paragraphs 1 to 4 any dispute arising as to the interpretation or application of the Convention in a particular case cannot be resolved by the competent authorities of the Contracting States in a mutual agreement procedure, the case may, if both competent authorities agree be resolved through an arbitration board created by the competent authorities and supplemented by independent persons and according to internationally accepted arbitration procedures. These procedures shall by mutual agreement be established between the competent authorities of both Contracting States. The decision of the arbitration board shall be binding on both Contracting States and the taxpayer or taxpayers involved with respect to that case. This paragraph will only apply after the competent authorities of both Contracting States have established the above-mentioned procedures.

SUB-SAHARAN AFRICA AND INTERNATIONAL ARBITRATION

Setting the scene

The past decade has seen a growing recognition of the substantial investment opportunities offered by Sub-Saharan Africa. This has been helped by increasing political stability, and the implementation of investor-friendly economic policies by many African governments. Measures to facilitate, promote and support the resolution of disputes by arbitration form a key element of these policies.

Africa is a diverse continent, and the legal position in each country is a product of the interactions between indigenous traditions, colonial history and more recent political developments. It is not possible here to address in detail the differences and distinctions between and within different Sub-Saharan African states, and some broad generalisations are unavoidable. What can be done, however, is to consider generally some of the key issues in arbitration in Sub-Saharan Africa and some recent developments.

Of course many international arbitrations about Sub-Saharan African projects and contracts end up having very little to do with Africa. It is common for contracts in Sub-Saharan Africa to provide for a foreign seat of arbitration (e.g. London or Paris) and to choose international arbitration rules (e.g. LCIA or ICC). Foreign parties also often seek, where possible, to enforce awards in jurisdictions outside Africa, if assets can be found there.

But, when contracting in Sub-Saharan Africa, there will still be times when a claimant has to conduct and perhaps enforce an arbitration in an African state (possibly under African arbitration rules), for instance where enforcement is sought against a party that does not hold assets outside Sub-Saharan Africa. The contract may also specify an African seat of arbitration or African arbitration rules. Whilst this is currently comparatively rare (particularly in relation to major projects), it is likely to occur more frequently in the future, particularly since this is something that many African governments (often contracting parties in relation to major African projects) are increasingly keen to promote.

What challenges does Sub-Saharan Africa present?

The challenges and issues particular to arbitrating in Sub-Saharan Africa, and the concerns to which they give rise, may well account for the fact that so many “African” arbitrations end up taking place outside Africa. What are these challenges and issues and what recent developments have there been?

Domestic Courts

Several of the most commonly perceived challenges and obstacles in arbitrating or enforcing arbitral awards in Africa relate to the approach and efficacy of the domestic courts in African states. These courts will often have a key part to play in relation to arbitration, potentially ruling on matters such as the existence or validity of an arbitration agreement (and consequent anti-suit injunctions, etc.), challenges regarding the constitution or conduct of the arbitral tribunal or the enforcement of an arbitral award.

The lack of an established body of jurisprudence in relation to international arbitration in many Sub-Saharan African countries, coupled, in some cases, with limited judicial familiarity with issues concerning international arbitration, inevitably fuels uncertainty as to the attitude and approach that domestic courts are likely to take. Another issue faced by many national courts in Sub-Saharan Africa is a strain on resources which can lead to backlogs of cases and lengthy delays, even in addressing relatively straightforward matters.

Corruption, whether on the part of arbitrators, the judiciary or court staff, is also a serious concern. Although there is a tendency to generalise about the extent of corruption in African nations, it still remains the case that corruption can often constitute a significant obstacle to the just and effective disposal of disputes by arbitral tribunals and national courts. Any risk of corruption inevitably gives rise to major concerns on the part of a party faced with the prospect of arbitration.

Enforcement and public policy

A common exemption from the recognition and enforcement of arbitral awards is on the grounds of public policy (for example under Article V(2)(b) of the New York Convention1). This is an important factor in relation to arbitrations in Africa, since public policy can be a relatively fluid concept, and may be very widely construed.

This exemption, which may add a further element of uncertainty to the enforcement of awards, can be exacerbated by the wide-ranging cultural, linguistic, religious and political diversity between, and sometimes even within, African states. For example, a significantly different view of public policy could be taken in courts which apply aspects of Shari’a law (e.g. in Sudan, or certain states of Nigeria) from those which apply the common law.

Trends and developments

There is a growing recognition among Sub-Saharan African states of the potentially detrimental effect of some of the issues outlined above, and an increasing acknowledgment that support for arbitration represents a key part of providing an investor-friendly climate. A number of states have therefore taken steps which have the potential significantly to facilitate and increase the use of arbitration.

New York Convention

One aspect of this is the growing trend in Africa of adoption of international standardised arrangements for the recognition and enforcement of arbitration agreements and arbitral awards.

A growing number of African countries (just over half) are signatories to the New York Convention, which provides that signatory states shall:

recognise and uphold valid written arbitration agreements; and
recognise and enforce arbitral awards (subject to certain exceptions – e.g. public policy).

Reliance on the Convention represents, in many instances, the preferred means by which arbitrating parties seek to enforce international arbitration awards in those states.

OHADA

The number of countries which are members of OHADA (the acronym, in French, for “Organisation for the Harmonisation of Business Law in Africa”) is also growing. OHADA came into being in 1993, with the aim of modernising, standardising and harmonising commercial law in Africa. Almost all of the OHADA member states are former French colonies (although Equatorial Guinea (formerly Spanish) and Guinea- Bissau (formerly Portuguese) are also members). The OHADA rules and institutions draw strongly on civil law legal traditions and French business law.

OHADA has a “Uniform Arbitration Act”, along similar lines to the UNCITRAL Model Law, which provides for the recognition and enforcement of arbitration agreements and arbitral awards. Arbitral awards with a connection to an OHADA member state are given final and binding status in all OHADA member states, on a par with a judgment of a national court. Support is provided by the OHADA Common Court for Justice and Arbitration (based in Abidjan, Cote d’Ivoire) which can rule on the application and interpretation of the Uniform Arbitration Act.

The enforcement regime under the Uniform Arbitration Act has a narrow definition of public policy. Enforcement of an arbitral award may only be refused on public policy grounds where the award manifestly breaches “international public policy”, as opposed to the public policy of individual member states.

UNCITRAL Model Law

Progress with the adoption of arbitration legislation based on the UNCITRAL Model Law has so far been limited (six states in Sub-Saharan Africa have adopted laws modelled on the Model Law so far) but the OHADA Uniform Arbitration Act (the provisions of which mirror the Model Law) is applicable in each of the OHADA member states.

ICSID and bilateral investment treaties

The great majority of Sub-Saharan African states have acceded to the ICSID2 Convention, and most bilateral investment treaties to which those states are party provide for the referral of investment disputes to ICSID for determination. In circumstances where a bilateral investment treaty is involved, this offers a further option for arbitration, although only in circumstances where the conduct of the state in question amounts to a breach of the applicable treaty, as opposed to a breach of the parties’ contract.

Specialist commercial courts

Some of the most significant difficulties and potential uncertainties relating to international arbitration in Sub-Saharan Africa concern the support provided by domestic courts. Recent steps taken in some Sub-Saharan African countries to improve this support could address some of these issues. For example, Tanzania (1999), Uganda (1999) and Ghana (2005) have established specialist commercial courts which employ a number of measures directed at better serving the needs of business, including specialised training for judges and support staff (with the facility for assistance by lay experts), bespoke procedural rules and the extensive utilisation of information technology.

These specialist courts are therefore likely to be better equipped (in comparison with other domestic courts) to provide timely and consistent rulings in relation to issues arising out of international arbitrations, and therefore offer the opportunity significantly to improve the support infrastructure for arbitration within the relevant countries.

Conclusions

There still remain a number of Sub-Saharan African states (for example, Burundi, Eritrea and Sudan) which are not signatories to the New York Convention, do not have arbitration laws based on the UNCITRAL Model Law and are not members of bodies such as OHADA. In these states the obstacles in the way of arbitrations and enforcement of international arbitral awards could therefore be more pronounced. However, the number of states in this category is falling, as more and more states realise the value of promoting and supporting arbitration.

On the credit side, there are a number of countries (for example Nigeria, Kenya and Uganda) where institutions and legislation to support arbitration are comparatively well-developed, and active steps are being taken to develop these further.

Enforcing an arbitration agreement, arbitrating or enforcing an arbitral award within a Sub-Saharan African state will always bring challenges. The picture inevitably varies across the continent but as the obstacles are addressed so the use of arbitration in Africa is expected to continue to grow.

So long as there is an appreciation of the challenges and issues which may arise, and a knowledge of the increasing number of options available in many countries to address them, the risk of problems with dispute resolution by arbitration need not deter those wishing to avail themselves of the lucrative investment opportunities which Sub- Saharan Africa has to offer.

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