THE Law Commission of India today submitted its Report No. 260 on the "Analysis of the 2015 Draft Model Indian Bilateral Investment Treaty"
to the Union Minister of Law and Justice. The report is presented with a
view to assist the Government of India in achieving a balanced
negotiating text that takes into consideration the protection of Indian
investors investing abroad, as well as safeguarding the regulatory
powers of the State.
India's bilateral investment treaty (BIT) programme is part of a
larger trade and investment agenda of the Indian government to boost
investor confidence and increase investment flows into and out of the
country. India signed its first BIT with the United Kingdom in 1994, and
has signed 83 BITs till date, of which 74 are in force. India has also
entered into eleven Free Trade Agreements which have a dedicated chapter
on investment, that are substantially similar to the standalone BITs.
India had a Model BIT (referred to as the ‘2003 Model' in the report),
which formed the basis for conducting subsequent BIT negotiations
between India and other countries for many years. For about two decades,
BITs in India did not attract much attention. India also had limited
involvement with Investment Treaty Arbitration (ITA), which refers to
the dispute resolution mechanism available under BITs. The period after
2010, however, saw a surge in India's involvement with ITA. Towards the
end of 2011, India received its first adverse award in relation to a BIT
in the White Industries Australia Limited V. Republic of India
case. India has also received numerous ITA notices from various
investors and under various BITs. As on date, there are fourteen known
pending proceedings of claims brought against India.
During this period, the Government undertook a review of the text of
its earlier 2003 Model BIT, and in March 2015, made public a new Draft
Model Indian Bilateral Investment Treaty (the ‘2015 Model'). The
objective of the 2015 Model, as stated on the Government's website, was
"to provide appropriate protection to foreign investors in India and
Indian investors in the foreign country, in the light of the relevant
international precedents and practices, while maintaining a balance
between the investor's rights and the Government obligations." The
Government added that the 2015 Model would form the basis for
negotiations with other countries.
The Law Commission undertook a study of the 2015 Model, and found that
the text has some concerns that could be addressed before it is
finalised. Accordingly, the Law Commission has made certain suggestions
on specific clauses of the 2015 Model. The suggestions in the report are
presented with a view to assist the Government to achieve a balanced
negotiating text, and are not to be regarded as recommendations.
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