Arbitration always reaches a conclusion, provides for impartial determinations with proper taxpayer participation, and applies law rather than expediency. While arbitration may also present delays, the process is orderly, predictable and transparent. As noted, there has been an important, albeit limited expansion in the use of arbitration in international taxation. We highlight three developments. This Convention represents an important precedent which merits consideration in framing the appropriate terms for international arbitration provisions in general.
Arbitration is compulsory.
The result of the arbitration is not technically binding, but the Convention does ensure that a binding result obtains. Following an arbitration decision, the competent authorities are provided an opportunity to achieve an alternative resolution, but it must be one which eliminates double taxation. The Convention applies to permanent establishments as well as companies. It applies to both juridical and economic double taxation. No rules of procedure are prescribed.