From Tax Filter to Fiscal Dialogue: Rethinking the Referral Mechanism in Investor-State Dispute Settlement ("ISDS")
October 3, 2025 by Iacopo Andrea AccollaThe intersection of taxation and investment protection has emerged as a contested dimension in investment arbitration. Tax carve-outs are a common way in which modern International Investment Agreements regulate the treatment of taxation, and some of them retain a “referral” or “filter” mechanism that grants tax authorities a gatekeeping role before arbitration may proceed. In practice, however, this mechanism has often proven ineffective. This commentary argues that it is time to reconsider the referral mechanism and explores mediation as a more balanced, transparent, and effective alternative.
