Natalia Quinones Cruz (LL.M. (International Tax) 2008, NYU; Quiñones Cruz Ltda, Bogotá) has published International Tax Arbitration and the Sovereignty Objection:  The South American Perspective, 51 Tax Notes Int’l 533 (Aug. 11, 2008).  Here is part of the Introduction:

[F]iscal sovereignty is still a threat to the actual functioning of mandatory arbitration clauses. In many countries, particularly in South America, fiscal sovereignty has been used as an argument against arbitration in tax matters, especially international tax matters. The purpose of this article is to describe the legal sovereignty constraints in South America, especially regarding the arbitrability and enforcement of tax disputes, and to explore whether these objections can be overcome to ensure the viability of international arbitration in South America. In Section I, the content of the sovereignty objection will be examined, and then legal examples of three representative countries will be addressed. In Section II, the effects of entering into tax treaties with arbitration clauses will be examined to illustrate the conflict between the sovereignty objections and the commitment to submit tax disputes to international tax arbitration. Lastly in Section III, I will offer some short-term and long-term solutions to eliminate the tension between domestic legal provisions that forbid tax arbitration because of sovereignty and public order concerns, and the international commitments that South American countries have undertaken or are planning to undertake regarding international tax arbitration.