Excluding Investment Arbitration through Double Tax Agreements with a New Article 25 of the UN Model: A Feasible Way Forward?

This article assesses the consequences of potential amendments to article 25 of the United Nations Model Tax Convention. The new article 25 of the UN Model and the new Commentary on that article deal with arbitration under tax treaties and essentially aim to restrict the scope of international trade and investment arbitration when dealing with tax matters. The question is whether that can effectively be achieved by revising article 25 of the UN Model. This article will first assess the practical application of the new rule in the situations it seems to be intended for. For the legal aspects, the article will treat the subject matter as an episode of fragmentation and see what rules of international law have earlier proven useful in similar situations. The Vienna Convention on the Law of Treaties from 1969 will be the background to the discussion. The conclusion is that the road to a practical application has uncertainties still unresolved. If the provision makes it into tax treaties in relationships where it was intended, it is not certain that it would fulfil its objectives.