"Government Readies Revised Model Bilateral Investment Treaty"
Model BIT
a government's template negotiating position for bilateral investment protection agreements, not itself legally binding.
Investor-State Dispute Settlement (ISDS)
a mechanism allowing foreign investors to sue a host state before an international arbitral tribunal.
India's Model Bilateral Investment Treaty (BIT) is the template the government uses as its starting position when negotiating investment protection agreements with individual countries. India signed a wide network of BITs from the 1990s as part of economic liberalisation. A wave of investor-state arbitration claims, including the landmark White Industries Australia Limited v. Republic of India arbitration award of 2011, exposed the government to large financial liability under older treaties. In response, India unilaterally terminated most of its existing BITs and adopted a new Model BIT in 2015. The Law Commission of India's 260th Report reviewed the draft model and suggested changes, but not all recommendations made it into the final text.
The 2015 Model BIT tilted sharply toward protecting the state's right to regulate, at the cost of investor protection. Its most restrictive feature required a foreign investor to litigate in Indian courts for five years before approaching international arbitration. This was far longer than the three-to-six-month consultation period most capital-importing and capital-exporting countries use before allowing recourse to arbitration. Treaty-making falls within the executive's domain under Article 73 of the Constitution. India has no requirement of mandatory parliamentary ratification before a treaty takes effect, and no structured public consultation process is built into the current revision.
A BIT protects foreign investment through standards such as fair and equitable treatment (FET), protection against uncompensated expropriation, and access to an Investor-State Dispute Settlement (ISDS) mechanism if the host state breaches its commitments. A model BIT is not binding by itself. It only signals a country's preferred negotiating position. The core policy tension it must resolve is between investor protection, which reassures capital exporters, and the host state's right to regulate in the public interest.
The 2015 Model BIT responded to earlier arbitration losses with a narrower definition of investment, carefully framed regulatory exceptions, and the five-year local-remedies exhaustion requirement before treaty arbitration could begin. …
With reference to treaty-making power in India, consider the following statements:
1.The power to enter into international treaties, including bilateral investment treaties, vests in the Union Executive under Article 73 of the Constitution.
2.Parliamentary ratification is constitutionally mandatory before a bilateral investment treaty can enter into force.
Which of the statements given above is/are correct?
Consider the following statements regarding India's 2015 Model Bilateral Investment Treaty (BIT):
1.It was shaped partly by the arbitral award in White Industries Australia Limited v. Republic of India.
2.It requires a foreign investor to exhaust local judicial remedies for three years before approaching international arbitration.
3.Treaty-making power in India vests in the Union Executive under Article 73 of the Constitution.
How many of the above statements are correct?
Consider the following statements:
1.The United Nations Conference on Trade and Development (UNCTAD) is primarily concerned with harmonising international trade law texts.
2.The United Nations Commission on International Trade Law (UNCITRAL) is currently examining reforms to investor-state dispute settlement, including a permanent tribunal mechanism.
Which of the statements given above is/are correct?
The 'Most Favoured Nation (MFN)' clause in an investment treaty typically allows a foreign investor to:
Match the following investment arbitration cases with their principal holding on the Most Favoured Nation (MFN) clause:
Case:
1.Maffezini v. Kingdom of Spain
2.Plama Consortium v. Republic of Bulgaria
Holding:
A.Rejected importing dispute-settlement provisions via an MFN clause absent clear treaty language
B.Allowed an MFN clause to bypass a local-court procedural requirement using a more favourable treaty
Select the correct match using the code below:
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