Tax Veto as a Special Jurisdictional and Substantive Issue in Investor-State Arbitration: Need for Reassessment
![handle is hein.journals/sujtnlr32 and id is 479 raw text is: TAX VETO AS A SPECIAL
JURISDICTIONAL AND SUBSTANTIVE
ISSUE IN INVESTOR-STATE
ARBITRATION: NEED FOR
REASSESSMENT?
Abba Kolo*
I. INTRODUCTION
Despite the evolving nature of the global economy and the
role of the state from the nation-states (Westphalia) into
market-states with emphasis on privatization of hitherto state
activities and competitive markets, which entail more external
disciplines on state power especially in the areas of trade, invest-
ment, and human rights,1 most governments still viewed taxa-
tion as a central element of sovereignty and so are reluctant to
accept extensive or heightened international disciplines on their
taxing powers.2 Thus, whilst accepting supranational control/
discipline over state conduct in many other areas, states party to
most modern investment treaties and instruments have either
carved out taxation all together from the treaty (e.g. Art. V
ASEAN Agreement on the Promotion and Protection of Invest-
ments, 1987) or restricted the applicability of some of the treaty
* Lecturer, Energy/Investment Law, Centre for Energy, Petroleum & Mineral
Law and Policy, University of Dundee, Scotland. Email: a.a.kolo@dundee.ac.uk.
1. Richard Falk, International Law and the Future, 27 THIRD WORLD Q. 727
(2006); JOHN JACKSON, SOVEREIGNTY, THE WTO AND CHANGING FUNDAMENTALS
OF INTERNATIONAL LAW 57-76, 134-204 (Cambridge Univ. Press 2006); Gus Van Har-
ten, The Public-Private Distinction in the International Arbitration and Individual
Claim Against the State, 56 INT'L & COMP. L. Q. 371, 375-77 (2007).
2. See WILLIAM HENRY ANDERSON, TAXATION AND THE AMERICAN ECONOMY:
AN ECONOMIC, LEGAL AND ADMINISTRATIVE ANALYSIS 20 (1951) (noting that [t]he
power to tax is an inherent part of the sovereign powers of every independent state.
Without this power, modern national states could not long exist.); David B. Oliver,
Tax Treaties and the Market-State, 56 TAX L. REV. 587 (2003) (analyzing effect of
transition of nation-states to market-states on tax treaties between states). Even
within the EU, where economic integration has deepened, many member states still
viewed some of the ECJ judgments on direct taxation as an interference in an area
that belongs to the exclusion of member states. See Dorota Lutostanska, Direct Taxa-
tion under Scrutiny, 33(3) LEGAL ISSUES OF ECON. INTEG'N. 335 (2006) (concluding
ECJ decision in Egon Schemp v. Finazamt Muchen represents tendency towards ap-
plying community law to EU citizens in home-state relations); John Snape, Corpora-
tion Tax Reform-Politics and Public Law, 4 BRIT. TAX REV., 349, 374-404 (2007); Zvi
DANIEL ALTMAN, DISPUTE RESOLUTION UNDER TAX TREATIES 32-34 (2005).](ViewImageLocal?handle=hein.journals/sujtnlr32&div=25&collection=&method=preview&ext=.png&size=3)
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Tax Veto as a Special Jurisdictional and Substantive Issue in Investor-State Arbitration: Need for Reassessment
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