What is Binding Arbitration
Part VI: Arbitration
Article 19 Mandatory Binding Arbitration
a person on the basis of a provision of a Covered Tax Agreement (as may be amended by Article 16 (mutual agreement procedure) paragraph 1), according to which a person can submit a case to a competent authority of a Contracting State if he or she is of the opinion that the measures one or both Contracting States lead or will lead to taxation for them which does not comply with the tax treaty covered by the Convention (as may be amended by the Convention), has submitted a case to the competent authority of a Contracting State because the measures of one or both of them Contracting States have resulted in taxation for them that does not correspond to the tax treaty covered by the Convention (as may be amended by the Convention), and
the competent authorities fail to do so within two years from the start of the period mentioned in paragraph 8 or, as the case may be, paragraph 9 (unless the competent authorities of the Contracting States have agreed a different period for this case before the end of this period and the person who has submitted the case, informed about it) a mutual agreement to settle the case after a provision of a tax agreement falling under the Convention (in the version possibly amended by Article 16 (mutual agreement procedure) paragraph 2), which provides that the competent authority make an effort will settle the case by agreement with the competent authority of the other contracting state,
If the person so requests in writing, any outstanding issues relating to the case shall be submitted to arbitration in the manner described in this Part and in accordance with the rules or procedures agreed by the competent authorities of the Contracting States in accordance with paragraph 10.
(2) If a competent authority has suspended the mutual agreement procedure mentioned in paragraph 1 because a case is pending in a court concerning one or more identical questions, the period provided for in paragraph 1 letter b is suspended  until either a a final court decision has been issued or the case has been discontinued or withdrawn. Even if a person who submitted a case and a competent authority have agreed to suspend the mutual agreement procedure, the period provided for in paragraph 1 letter b is suspended  until the suspension has been lifted.
(3) If both competent authorities agree that a person directly affected by the case has failed to provide in good time additional essential information that was requested by one of the two competent authorities after the start of the period provided for in paragraph 1 letter b the period provided for in paragraph 1 letter b is extended by a period corresponding to the period beginning on the day on which the information was requested and ending on the day on which it was made available.
The arbitration award on the issues subject to arbitration shall be implemented by the mutual agreement provision relating to the case referred to in paragraph 1. The award is final.
The arbitration award is binding on both contracting states, unless
a person directly affected by the case does not recognize the mutual agreement through which the arbitration award is implemented. In this case, the case is not eligible for further examination by the competent authorities. The mutual agreement, through which the arbitration ruling on the case is implemented, is deemed not to have been recognized by a person directly affected by the case, unless a person directly affected by the case has been notified within 60 days of the communication of the mutual agreement to the person withdraws any issues resolved in the mutual agreement implementing the arbitral award from review by a court or terminating any pending legal and out-of-court redress proceedings in relation to these matters in a manner consistent with this mutual agreement;
the award will be declared invalid in a final decision by the courts of one of the contracting states. In this case, the request for arbitration under paragraph 1 shall be deemed not to have been filed and the arbitration shall be deemed not to have been conducted (except for the purposes of Articles 21 (Confidentiality of Arbitration) and 25 (Cost of Arbitration)). In this case, a new request for arbitration may be filed unless the competent authorities agree that such a new request should not be admissible;
a person directly affected by the case initiates legal proceedings on the issues resolved in the mutual agreement that implements the arbitral award.
(5) The competent authority at which the original application for a mutual agreement procedure according to paragraph 1 letter a was received shall transmit within two calendar months of receipt of the application
a notification of receipt of the application to the person who submitted the case, and
a notification of this application with a copy of the same to the competent authority of the other contracting state.
(6) Within three calendar months after a competent authority has received the request for a mutual agreement procedure (or a copy thereof from the competent authority of the other Contracting State), it shall
either inform the person who submitted the case and the other competent authority that it has received the information necessary to enable a factual examination of the case, or
request additional information from this person for this purpose.
(7) If one or both competent authorities have requested additional information from the person who submitted the case in accordance with paragraph 6 letter b, which is necessary for an objective examination of the case, the competent authority which requested the additional information shall notify , this person and the other competent authority within three calendar months of receiving the additional information from this person either with,
that it has received the information requested
or that some of the requested information is still missing.
(8) If neither of the two competent authorities has requested additional information in accordance with paragraph 6 letter b, the start of the period specified in paragraph 1 is the earlier of the two following days:
the day on which both competent authorities sent the person who submitted the case a notification in accordance with paragraph 6 letter a, or
the day that is three calendar months after the notification to the competent authority of the other Contracting State in accordance with paragraph 5 letter b.
(9) If additional information was requested in accordance with paragraph 6 letter b, the start of the period specified in paragraph 1 is the earlier of the following two days:
the last day on which the competent authorities that requested additional information sent the person who submitted the case and the other competent authority a notification in accordance with paragraph 7 letter a, or
the day three calendar months after the date on which both competent authorities have received from the person who submitted the case all the information requested by either competent authority.
However, if one or both competent authorities transmit the notification under paragraph 7 letter b, this shall be deemed to be a request for additional information under paragraph 6 letter b.
(10) The competent authorities of the Contracting States shall regulate by mutual agreement (in accordance with the article of the relevant tax treaties covered by the Convention, which relates to mutual agreement procedures) how this part is to be applied and what information each competent authority needs at least for an objective examination of the case. This mutual agreement must be made before the day on which outstanding questions in the context of a case are first considered to be subject to arbitration, and can be changed thereafter if necessary.
(11) For the purposes of applying this Article to its Covered Tax Agreements, a Party to this Convention may reserve the right to replace the two-year period provided for in paragraph 1 (b) by a period of three years.
(12) A Party to this Convention may reserve the following notwithstanding paragraphs 1 to 11 of its Covered Tax Treaties:
An open question arising from a case which is the subject of a mutual agreement procedure and which would otherwise fall within the scope of the arbitration procedure provided for in this Convention may not be submitted to arbitration if a court decision on this issue has already been made in one of the two contracting states has happened.
If at any point in time after the request for arbitration has been submitted and before the arbitration board in one of the contracting states has forwarded the arbitral award to the competent authorities of the contracting states, the arbitration proceedings shall end.
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