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Commerce Ministry backs tweaks to bilateral investment treaty.
Jul 12, 2023

The Commerce and Industry Ministry has favoured tweaks in India's model Bilateral Investment Treaty (BIT) text for some of its trade partners but is firm on its stance on foreign investors not invoking arbitration until they have exhausted all local remedies.

As part of its ongoing negotiations with the European Union, India has insisted that the country's judiciary is strong and hence, investors need to exhaust all local remedies before opting for arbitration.

'Tweaks can be in the BIT to suit some of our partners as there are provisions available for that,' said an official.

'But our position is that we have an independent and strong judiciary and we would want investors to exhaust the local remedies. That is our non-negotiable position,' the official added.

The EU's investment model allows foreign investors to pursue a claim directly against a host country in the face of certain adverse actions by the latter.

However, under New Delhi's rule of exhaustion of local remedies, a claim must first be submitted before a relevant domestic court or administrative body. This is aimed to prevent arbitrators from having expanded jurisdiction.

'Their model is to look for an independent, international court or a panel and both sides pay for the expenses but this does not suit us. Arbitration has several models. So, we need a model that suits both sides,' the official said.

India's stance is significant as it has lost disputes to investment treaty award holders like Cairn Energy PLC, Vodafone Group BV and Devas Mauritius Ltd, and now has to balance safeguarding foreign investment with protecting public interest.

economictimes.indiatimes.com

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