India’s bilateral investment treaty negotiations – the stalemate and the way forward

Recently, India announced that its Union Cabinet had approved signing of a new Bilateral Investment Treaty [BIT] with Cambodia, another South-Asian country. The IA Reporter also reported that India and Brazil have also concluded (referring to finalization of draft) the much-anticipated BIT. These are important events as the new BIT with Cambodia as well Brazil is supposedly based on the controversial Model Bilateral Investment Treaty 2015 (Model BIT). However, while the both the BITs are yet to be signed (no press release by Indian Government yet confirming that they have been signed), many developed or capital-exporting nations have shown reluctance in agreeing to the clauses as contained in the Model BIT citing the low level of protection offered to investments and high threshold of compliance before bringing a dispute before an international tribunal. While such reluctance on the part of developed countries is not surprising, it is important to acknowledge the merit in some of these concerns.

India has been revaluating its BIT’s since 2012 when India started receiving large number of arbitration notices due to retrospective taxation and cancellation of 2G licenses by the apex court. Last year, after much discussion and debate, India released the new Model BIT replacing the 2003 Model Bilateral Investment Promotion Agreement (Model BIPA). Subsequently, India gave a notice of termination of the existing BIPAs to 57 Countries and also requested 25 others for joint interpretational statements. India started its renegotiation for new BITs with a number of countries including US, Canada, Australia, Brazil & Cambodia and also with EU based on its Model BIT.

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