"India Revives Bilateral Investment Treaties With Shorter Dispute Rules"
Bilateral Investment Treaty (BIT)
an agreement between two countries setting rules to protect private investment by investors of one in the other.
Investor-State Dispute Settlement (ISDS)
mechanism allowing a foreign investor to bring a claim against a host state before an international tribunal.
A bilateral investment treaty (BIT) is an agreement between two countries that sets rules protecting private investment in each other. Before 2016, India had signed BITs with 83 countries using an older template. A wave of adverse international arbitration awards, including the White Industries Australia v. India (2011) case, made India worried that foreign investors were using these treaties to challenge routine domestic regulatory and judicial decisions. India unilaterally terminated BITs with most of the 83 countries it had signed them with. India replaced the old template with a cautious 2015 Model BIT.
The 2015 Model BIT required a foreign investor to exhaust local remedies for five years before arbitration. It also had a narrow definition of what counts as a protected investment. Trade partners and foreign investors criticised the long waiting period. They pointed out that domestic litigation in India can itself take many years. This made India's investment treaty network shrink for close to a decade. This happened even as the country sought larger foreign investment inflows to fund its growth.
In actual negotiations since then, India has moved beyond the rigid 2015 template. Its treaties with the UAE and Israel cut the exhaustion period to three years. The recent agreement with Saudi Arabia goes further. It sets a two-year period, the shortest India has accepted so far. The government now expects to conclude four to five more such agreements by the end of the year. This reflects a broader push to make India's treaty regime less defensive and more attractive to incoming capital. This includes interest from Gulf investors in sectors such as oil refining.
Exhaustion of local remedies (ELR) requires an investor to seek redress in domestic courts before international arbitration. A foreign investor must first try to get relief from the host country's own courts or administrative bodies. Only then can the investor move to an international forum. Investor-State Dispute Settlement (ISDS) lets a foreign investor bring a claim against a host government before an international tribunal if the state is alleged to have breached treaty protections. These protections include fair treatment of the investment or protection against seizure without compensation.
The length of the ELR period is a trade-off at the centre of BIT design. A shorter ELR period gives investors quicker arbitration access but narrows the state's policy space. The government gets less time to resolve a dispute through its own institutions before facing an international claim. …
Which Article of the Constitution of India vests the executive power to enter into treaties and international agreements?
Consider the following statements regarding Bilateral Investment Treaties (BITs):
1.A BIT is an agreement between two countries that sets rules for protecting investment made by investors of one country in the other.
2.The Exhaustion of Local Remedies (ELR) rule requires a foreign investor to seek redress in the host country's own courts before bringing an international arbitration claim.
3.Investor-State Dispute Settlement (ISDS) allows an investor to bring a claim only before the home country's domestic courts, not before an international tribunal.
Which of the statements given above is/are correct?
Match List I (Investment Treaty/Template) with List II (Exhaustion of Local Remedies period) and select the correct answer using the codes given below:
List I:
A.India's 2015 Model BIT
B.India-UAE BIT
C.India-Saudi Arabia BIT
List II:
1.Three years
2.Five years
3.Two years
Consider the following statements:
1.India unilaterally terminated most of its bilateral investment treaties signed under the pre-2016 template.
2.South Africa and Indonesia are among other developing countries that have also terminated BITs to preserve domestic regulatory space.
Which of the statements given above is/are correct?
Consider the following statements:
1.The European Union withdrew from the Energy Charter Treaty, citing incompatibility of its ISDS provisions with the Paris Agreement.
2.The USMCA (United States-Mexico-Canada Agreement) removed ISDS clauses between the United States and Canada.
3.New Zealand retained ISDS provisions in the CPTPP while other member countries opted out.
Which of the statements given above is/are correct?
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