Tax Dispute Resolution Under the UN Convention on Tax: Lessons from investment arbitration
IISD hosted a side event on the margins of the 4th Session of the Intergovernmental Negotiating Committee on the UN Framework Convention on Tax, happening in New York. The event brought together government officials, civil society, and experts to examine lessons from Investor‑State Dispute Settlement, a mechanism originating in international investment law, drawing lessons from associated risks as a baseline to inform current discussions on the Convention’s protocol on tax dispute prevention and resolution.
The negotiation of a UN Framework Convention on Tax represents a defining moment for international tax governance. The Convention aims to address long-standing coordination gaps in the global tax system through a multilateral framework under the UN. One of the most sensitive aspects of the negotiations is the proposed Protocol on the prevention and resolution of tax disputes.
No comprehensive tax dispute settlement mechanism currently exists. Negotiators are weighing different options, from state-to-state mechanisms like the Mutual Agreement Procedure (MAP) to various forms of arbitration, including mandatory binding arbitration (MBA). ISDS, a mechanism originating in investment law, has entered discussions by analogy. Some states have cited negative experiences with ISDS to argue against arbitration, notably MBA. This raises important questions about the extent to which ISDS and MBA are comparable.
Drawing on over a decade of IISD experience with ISDS reform at UNCITRAL, this event presents our new policy brief, which explains why ISDS is ill-suited for tax disputes and provides a framework for evaluating other arbitration options under the Protocol, including MBA.
The launch was followed by a roundtable with experts and government officials, as well as a Q&A session. For negotiators, policymakers, organizations, or anyone involved in shaping the second Protocol, this session offers more clarity to navigate the choices ahead—and help ensure the Convention gets the Protocol right.
Our speakers
- Alexandra Readhead, Director, Tax and Sovereign Debt Program, IISD
- Frederik Heitmuller, Associate Postdoctoral Fellow - International Centre for Tax & Development
- Lise Johnson, Partner, Curtis, Mallet-Prevost, Colt & Mosle LLP
- Anthony Munanda, Head of Domestic Resource Mobilization, African Tax Administration Forum
- Gian Sandri, Senior Policy Advisor and Tax Treaty Negotiator, Swiss Federal Department of Finance
See also
A Roadmap for Negotiating the Protocols to the United Nations Framework Convention on Tax
This report outlines key challenges, ongoing efforts, and strategic recommendations for developing the protocols under the United Nations Framework Convention on International Tax Cooperation (UN FCITC).
Inside the UN Tax Convention Negotiations
Latest updates on negotiations toward a United Nations Framework Convention on International Tax Cooperation, with expert analysis of the process and implications for global tax policy.
UN Tax Convention: What happened at recent negotiations, and what’s next?
This article analyzes key decisions made at the latest round of negotiations for a UN Convention on Tax and explores how the convention can be most effective tackling the challenges of developing countries.
Arbitration and the United Nations Framework Convention on Tax
This brief examines the risks of using investor–state dispute settlement (ISDS) for cross-border tax disputes under the UN Framework Convention on Tax, showing why ISDS is ill-suited and offering a baseline for negotiators exploring alternative arbitration options in the protocol.