The right to tax constitutes a core attribute of State sovereignty. As U.S. Supreme Court Justice Oliver Wendell Holmes Jr. said, "Taxes are the price we pay for civilization." However, States may voluntarily limit their taxation powers by concluding investment protection treaties limiting their right to regulate, including their right to tax.
As a result, investors have brought challenges to a variety of State taxation measures. Some of these cases have resulted in substantial awards (e.g., the USD 50 billion award in the Yukos cases, the USD 1.25 billion award in Cairn Energy v. India). Partly in response, States have increasingly sought to exclude tax measures from the scope of their investment protection treaties.
Tax-related disputes often come hand-in-hand with political controversies and are related to current debates about the legitimacy of arbitration, the limits of tribunals' powers and the efforts to reform the system of investor-State dispute resolution.
As part of this broader discussion, BIICL and WilmerHale are pleased to present this report on taxation measures in investment disputes. In contrast to the existing literature, we have taken an empirical approach to assess various aspects of these disputes: the geographic origins of claimants and respondent States, the economic sectors involved, the types of measures challenged, and the likelihood of success, among others.
Much of this report presents the findings of our empirical analysis of 62 investor-State treaty disputes and 21 contractual tax-related disputes. In additional to painting a bigger picture of tax-related disputes and identifying patterns in tribunals' decision-making, the report discusses specific treaty provisions that give rise to tax disputes.
We hope that this report will help those working in the field of investor-State arbitration to better understand the key statistical trends and patterns of decision-making. At the same time, the report may help those involved in reforming the system of investor-state dispute resolution or investment treaties.
If you are interested in getting a final electronic copy of the report in January 2024, please leave your email here.
Join the conversation @BIICL #itflaw #isds #arbitration
- Dr. Claudia Annacker, Dechert
- Prof. Robert Danon, University of Lausanne
- Prof. Yarik Kryvoi, British Institute of International and Comparative Law
- Danielle Morris, WilmerHale
- Sam Winter-Barker, WilmerHale
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