A Study On The Arbitrability Of Tax Disputes In International Investment

With the globalization of economic activities, international dispute resolution hasbeen common. However, the resolution of international tax disputes, especiallyinternational investment arbitration of tax disputes, has not received enough attention.In the field of international investment, tax policies play a special role in the processof attracting foreign investment by host countries. In the traditional theory andpractice of international tax law, based on the consideration of tax sovereignty,international tax dispute settlement has been limited at the national level, where theprivate are excluded from. It is worth noting that the tax sovereignty of sovereignstates has been seriously challenged by the international investment dispute resolution.The recent tax-related international investment cases indicate that, in the circumstanceof international investment dispute settlement mechanism opening to the private,international investment arbitration is available for a host country’s tax measures to befiled. This thesis is aimed to discuss the arbitrability of tax disputes arising frominternational investment, and further make proposals on the improvement ofinternational tax dispute resolution mechanism.Currently, international tax convention dispute resolution mechanism mainlyadopts Mutual Agreement Procedure, however, with the increase of disputes, MutualAgreement Procedure is now gradually showing its disadvantage. Therefore, duringthe past years, Arbitration and Judicial Settlement which is proposed by scholar havecome out, aiming to compensate such disadvantage of MAP and to improve the entireinternational tax convention dispute resolution mechanism.(there are mainly threemethods of resolving international tax convention dispute, namely Mutual AgreementProcedure, Arbitration and Judicial Settlement which is proposed by scholar).Meanwhile, international investment conventions also involve related tax disputeresolution articles, one is tax terms, which provide that excluding tax matters,providing exceptions regarding tax matters, and even not providing tax matters clearly.The other is dispute resolution terms, which provide the scope of arbitration, and the procedure of arbitration. This thesis is aimed to making proposals on our country’sresolution to international tax dispute based on analysis and comparison of theinternational tax and investment convention dispute resolution mechanism combinedwith the current situation of our country.This thesis is divided into four chapters.Chapter One is mainly about the arbitration mechanism of the international taxconvention, including the background, current legislation circumstances, contents andobstacles to implementation.Chapter Two is mainly about the arbitration mechanism of the internationalinvestment convention, including the definition of international investmentconvention tax disputes, tax related articles of the international investment convention,meaning the taxation and dispute resolution articles, and the arbitration mechanism ofinternational investment convention.Chapter Three is mainly about the analysis of a tax dispute resolved by ainternational investment arbitration tribunal, the OEPC v. Ecuador case, including theanalysis about several issues during the trial of arbitration combining some otherawards made by arbitration tribunal as well.Chapter Four is mainly about the analysis of drawbacks of the current taxationarbitration mechanism, and then makes proposals on the improvement of taxationarbitration mechanism of our country considering the practical situation.The ending part makes a conclusion on how to improve the international taxdispute arbitration mechanism.