International Arbitration Trends in 2026
Tax measures are rapidly becoming a central catalyst for high-stakes, cross-border disputes. With governments adopting more assertive – and sometimes retroactive – fiscal policies, companies can expect heightened scrutiny and intervention across multiple jurisdictions. Local audits now often lead to complex, multifaceted disputes involving litigation, arbitration and even diplomatic channels. Businesses that prioritize fiscal risk management from the outset will be best positioned to navigate this evolving landscape.
In detail
Tax and fiscal disputes have continued to evolve, with a noticeable increase in both frequency and complexity since our 2023 report. The continued prevalence of these disputes is driven by dynamic fiscal and political pressures: post-pandemic budget gaps, expanding defense expenditures and ongoing geopolitical shifts have prompted governments to pursue revenue more aggressively.
We expect future tax and fiscal disputes to arise from large-scale assessments stemming from reinterpretations of existing law, retroactive adjustments, the introduction or increase of royalties and special levies in extractive industries and the creation of new sector-specific taxes. Tax-related issues are increasingly at the forefront of both investor-state and contractual disputes, underscoring the importance of effective tax risk management as a strategic imperative, especially given the significant effect that fiscal regimes have on project economics.
Across different regions, this trend is taking shape in unique ways:
- Latin America: Many countries in Latin America are in the midst of fiscal reforms. Tax authorities in Mexico and Argentina, for example, are implementing higher levies on extractive and consumer-facing industries, expanding both the scope and enforcement of indirect taxes (e.g. VAT). In Brazil, the reintroduction of a 10% withholding tax on dividends paid to non-residents – ending a 30-year exemption – has triggered immediate friction regarding the computation of effective tax rate caps for refunds and the application of transitional “grandfathering” rules.
- Africa: Resource-rich countries across the continent are revising royalty rates, introducing new levies and adopting new interpretations of traditional tax rules. The evolving environment is leading to more frequent and complex investor-state and contractual disputes, especially where the retroactive enforcement of new rules or interpretations is in play.
- Europe and Asia: Several European jurisdictions are signaling interest in sector-specific taxes for digital and high-value industries, while some Asian countries are also contemplating updates to their royalty and tax frameworks.
Practical takeaways
To effectively manage tax and fiscal disputes in an evolving regulatory landscape, businesses should consider taking the following actions:
- Map your exposure: Create a global heat map to pinpoint where your organization is most vulnerable, focusing on jurisdictions, sectors and counterparties that are facing or anticipating significant fiscal reforms.
- Stress-test contracts and dispute clauses: Systematically review contracts, especially those with governments and state-owned entities. Ensure that change-in-law, stabilization, tax and dispute resolution clauses are sufficiently robust to handle evolving risks.
- Plan for multi-track disputes: Develop clear internal guidelines on when to pursue domestic legal remedies, arbitration or MAPs under tax treaties to ensure a swift and coordinated response.
- Integrate tax planning with dispute strategy: Design tax structures and investment holdings with potential disputes in mind, ensuring that your planning facilitates both compliance and effective recourse in the event of a challenge.
- Invest in early international law risk assessment: Engage experienced international counsel to assess the legal risks from a legal perspective in addition to tax legal advisers. Early identification helps prevent issues from escalating across jurisdictions and ensures your position is well protected in any eventual arbitration or legal proceedings.
If you would like to discuss any of these topics in more detail, your Freshfields contact would be glad to assist.
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