IDEAS home Printed from
   My bibliography  Save this paper

The Significance and Problems of Tax Treaty Arbitration: An analysis of the new Japan-Netherlands tax treaty (Japanese)


  • KOTERA Akira


I analyze the arbitration clause of the new Japan-Netherlands tax treaty, which is the first instance for Japan to adopt an arbitration clause in its tax treaties. Disputes arising from tax treaties are typically settled through a mutual agreement procedure. Even so, the history of tax treaty arbitration is not new, the first being the Ireland-UK tax treaty of 1926. Adoption of an arbitration clause in the Japan-Netherlands tax treaty appears to have been prompted by the adoption of such clause in the 2008 OECD model tax treaty. The most important feature of the arbitration clause in the Japan-Netherlands tax treaty is that arbitration is designed as part of the mutual agreement procedure. Only by designing arbitration as such can the basic nature of the mutual agreement procedure be maintained, whereby a dispute settlement is an intergovernmental process and an agreement reached between the competent authorities of the two countries has a domestic effect. It should be noted that the arbitration procedure under the Japan-Netherlands tax treaty has three problematic points: transparency, rules for treaty interpretation, and control over arbitration. First, regarding transparency, at least arbitration decisions—which are in principle treated as confidential under the treaty—should be made public. Second, rules for treaty interpretation are defined as part of the arbitration procedure and the relevant provisions are set forth—not in the new tax treaty itself—but in the implementing agreement concluded along with the treaty. However, such rules should be provided for in the treaty itself, which is an official legal document duly endorsed by the parliaments of both contracting states. Third, regarding control over arbitration, the current system where domestic courts of both contracting states are given the control function is inappropriate. If any organization or body is to exercise control over arbitration, that function must be fulfilled by a separate arbitration committee. It is also possible not to prepare a control system. Lastly, if we follow the OECD model tax treaty, we should not adopt it unconditionally but only after necessary revisions are made in view of conditions such as the national legal systems of the contracting states.

Suggested Citation

  • KOTERA Akira, 2011. "The Significance and Problems of Tax Treaty Arbitration: An analysis of the new Japan-Netherlands tax treaty (Japanese)," Discussion Papers (Japanese) 11036, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:rdpsjp:11036

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eti:rdpsjp:11036. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (KUMAGAI, Akiko). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.