MEMORANDUM OF UNDERSTANDING 

At the signing today of the Protocol Amending the Convention Between the 

Government of the United States of America and the Government of the French 

Republic for the Avoidance of Double Taxation and the Prevention of Fiscal 

Evasion with Respect to Taxes on Income and Capital, Signed at Paris on 

August 31, 1994, as Amended by the Protocol Signed on December 8, 2004, the 

undersigned have agreed to define the mode of application of paragraphs 5 and 6 

of Article 26 (Mutual Agreement Procedure) of the Convention, as further 

amended by the Protocol signed today, as follows: 

In respect of any case where the competent authorities have endeavored but are 

unable to reach an agreement under Article 26 regarding the application of the 

Convention, binding arbitration shall be used to determine such application, 

unless the competent authorities agree that the particular case is not suitable for 

determination by arbitration. If an arbitration proceeding under paragraph 5 of 

Article 26 commences (the Proceeding), the following rules and procedures 

shall apply. 

a) The Proceeding shall be conducted in the manner prescribed by, and 

subject to the requirements of, paragraphs 5 and 6 of Article 26 and these 

rules and procedures, as completed by any other rules and procedures 

agreed upon by the competent authorities pursuant to subparagraph q) 

below. 

b) The determination reached by an arbitration panel in the Proceeding 

shall be limited to a determination regarding the amount of income, 

expense or tax reportable to the Contracting States. 

c) Notwithstanding the initiation of the Proceeding, the competent 

authorities may reach a mutual agreement to resolve a case and terminate 

the Proceeding. Correspondingly, a concerned person may withdraw a 

request for the competent authorities to engage in the Mutual Agreement 

Procedure (and thereby terminate the Proceeding) at any time. 

d) The requirements of subparagraph d) of paragraph 6 of Article 26 shall 

be met when the competent authorities have each received from each 

concerned person a statement agreeing that the concerned person and each 

person acting on the concerned person's behalf shall not disclose to any 

other person any information received during the course of the Proceeding 

from either Contracting State or the arbitration panel, other than the 

determination of the Proceeding. A concerned person that has the legal 

authority to bind any other concerned person(s) on this matter may do so 

in a comprehensive statement. 
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e) Each Contracting State shall have 90 days from the date on which the 

Proceeding begins to send a written communication to the other 

Contracting State appointing one member of the arbitration panel. The 

members appointed shall not be employees of the tax administration of the 

Contracting State which appoints them. Within 60 days of the date on 

which the second such communication is sent, the two members appointed 

by the Contracting States shall appoint a third member, who shall serve as 

Chair of the panel. If the members appointed by the Contracting States fail 

to agree upon the third member, these members shall be regarded as 

dismissed and each Contracting State shall appoint a new member of the 

panel within 30 days of the dismissal of the original members. The 

competent authorities shall develop a non-exclusive list of individuals 

with familiarity in international tax matters who may potentially serve as 

the Chair of the panel. In any case, the Chair shall not be a citizen of 

either Contracting State. 

f) The arbitration panel may adopt any procedures necessary for the 

conduct of its business, provided that the procedures are not inconsistent 

with any provision of Article 26. 

g) Each of the Contracting States shall be permitted to submit, within 60 

days of the appointment of the Chair of the arbitration panel, a Proposed 

Resolution describing the proposed disposition of the specific monetary 

amounts of income, expense or taxation at issue in the case, and a 

supporting Position Paper, for consideration by the arbitration panel. 

Copies of the Proposed Resolution and supporting Position Paper shall be 

provided by the panel to the other Contracting State on the date on which 

the later of the submissions is submitted to the panel. In the event that 

only one Contracting State submits a Proposed Resolution within the 

allotted time, then that Proposed Resolution shall be deemed to be the 

determination of the panel in that case and the Proceeding shall be 

terminated. Each of the Contracting States may, if it so desires, submit a 

Reply Submission to the panel within 120 days of the appointment of its 

Chair, to address any points raised by the Proposed Resolution or Position 

Paper submitted by the other Contracting State. Additional information 

may be submitted to the arbitration panel only at its request, and copies of 

the panel's request and the Contracting State's response shall be provided 

to the other Contracting State on the date on which the request or the 

response is submitted. Except for logistical matters such as those 

identified in subparagraphs l), n) and o) below, all communications from 

the Contracting States to the arbitration panel, and vice versa, shall take 

place only through written communications between the designated 

competent authorities and the Chair of the panel. 
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h) The presenter of the case to the competent authority of a Contracting 

State shall be permitted to submit, within 90 days of the appointment of 

the Chair of the arbitration panel, a Position Paper for consideration by the 

arbitration panel. Copies of the Position Paper shall be provided by the 

panel to the Contracting States on the date on which the later of the 

submissions of the Contracting States is submitted to the panel. 

i) The arbitration panel shall deliver a determination in writing to the 

Contracting States within six months of the appointment of its Chair. The 

panel shall adopt as its determination one of the Proposed Resolutions 

submitted by the Contracting States. 

j) The determination of the arbitration panel shall pertain to the 

application of the Convention in a particular case, and shall be binding on 

the Contracting States. The determination of the panel shall not state a 

rationale. It shall have no precedential value. 

k) As provided in subparagraph e) of paragraph 6 of Article 26, the 

determination of an arbitration panel shall constitute a resolution by 

mutual agreement under Article 26. Each concerned person must, within 

30 days of receiving the determination of the panel from the competent 

authority to which the case was first presented, advise that competent 

authority whether that concerned person accepts the determination of the 

panel. In the event the case is in litigation, each concerned person who is a 

party to the litigation must also advise, within the same time frame, the 

relevant court of its acceptance of the determination of the panel as the 

resolution by mutual agreement and withdraw from the consideration of 

the court the issues resolved through the Proceeding. If any concerned 

person fails to so advise the relevant competent authority and relevant 

court within this time frame, the determination of the panel shall be 

considered not to have been accepted in that case. Where the 

determination of the panel is not accepted, the case may not subsequently 

be the subject of a Proceeding. 

l) Any meeting(s) of the arbitration panel shall be in facilities provided by 

the Contracting State whose competent authority initiated the mutual 

agreement proceedings in the case. 

m) The treatment of any associated interest or penalties is outside the 

scope of the Proceeding and shall be determined by applicable domestic 

law of the Contracting State(s) concerned. 
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n) No information relating to the Proceeding (including the panel's 

determination) may be disclosed by the members of the arbitration panel 

or their staffs or by either competent authority, except as permitted by the 

Convention and the domestic laws of the Contracting States. In addition, 

all material prepared in the course of, or relating to, the Proceeding shall 

be considered to be information exchanged between the Contracting 

States. All members of the arbitration panel and their staffs must agree in 

statements sent to each of the Contracting States in confirmation of their 

appointment to the arbitration panel to abide by and be subject to the 

confidentiality and nondisclosure provisions of Article 27 (Exchange of 

Information) of the Convention and the applicable domestic laws of the 

Contracting States. In the event those provisions conflict, the most 

restrictive condition shall apply. 

o) The fees and expenses shall be borne equally by the Contracting States. 

In general, the fees of members of the arbitration panel shall be set at the 

fixed amount of $2,000 (two thousand United States dollars) per day or 

the equivalent amount in euro, subject to modification by the competent 

authorities. In general, the expenses of members of the arbitration panel 

shall be set in accordance with the International Centre for Settlement of 

Investment Disputes (ICSID) Schedule of Fees for arbitrators (as in effect 

on the date on which the arbitration proceedings begin), subject to 

modification by the competent authorities. Any fees for language 

translation shall also be borne equally by the Contracting States. Meeting 

facilities, related resources, financial management, other logistical 

support, and general administrative coordination of the Proceeding shall 

be provided, at its own cost, by the Contracting State whose competent 

authority initiated the mutual agreement proceedings in the case. Any 

other costs shall be borne by the Contracting State that incurs them. 

p) For purposes of paragraphs 5 and 6 of Article 26 and this 

paragraph, each competent authority shall confirm in writing to the other 

competent authority and to the concerned person(s) the date of its receipt 

of the information necessary to undertake substantive consideration for a 

mutual agreement. Such information shall be submitted to the competent 

authorities under relevant internal rules and procedures of each of the 

Contracting States. However, this information shall not be considered 

received until both competent authorities have received copies of all 

materials submitted to either Contracting State by the concerned person(s) 

in connection with the mutual agreement procedure. 
 

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q) The competent authorities of the Contracting States may complete the 

above rules and procedures as necessary to more effectively implement 

the intent of paragraph 5 of Article 26 to eliminate double taxation. 

This Memorandum of Understanding shall enter into force on the date of entry 

into force of the Protocol Amending the Convention Between the Government 

of the United States of America and the Government of the French Republic for 

the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with 

Respect to Taxes on Income and Capital, Signed at Paris on August 31, 1994, as 

Amended by the Protocol Signed on December 8, 2004, signed at Paris on 

January 13, 2009. 

IN WITNESS WHEREOF, the undersigned, being duly authorized thereto, 

have signed this Memorandum of Understanding. 

DONE at Paris, in duplicate, this thirteenth day of January, 2009, in the English 

and French languages, each text being equally authentic. 

FOR THE GOVERNMENT FOR THE GOVERNMENT 

OF THE UNITED STATES OF OF THE FRENCH REPUBLIC 

AMERICA