‘India and Bilateral Investment Treaties’: A summary of the recommendations in the 10th Report of the Committee on External Affairs, Ministry of External Affairs

Members of the Aarna Law team have had the privilege of representing the Republic of India for the past 6 years in two significant investment treaty arbitrations brought against her by investors under the India-UK Agreement for the Promotion and Protection of Investments.

This is a summary of the Recommendations (14 Nos.) put forth by the Committee on External Affairs (2020-2021) in its 10th Report recently presented to Parliament on the subject ‘India and Bilateral Investment Treaties’

  • The Committee calls upon the MEA to “actively facilitate” the process for more negotiations to be initiated in the “shortest possible time.”
  • The Committee urges the “Ministry to take pro-active steps” and to “coordinate with the concerned Ministries/Departments so that negotiations are concluded, and the agreements are finalized at the earliest”.
  • The Committee desires that the MEA should work in close coordination with the Department of Legal Affairs, Department of Economic Affairs and other concerned Ministries/Departments and make a “combined effort to develop in-house expertise and panel of lawyers who have experience in investment treaty law so that best international treaties are drafted with least scope of arbitrations”.
  • That a “full term course for Government officials in the field of investment treaty and investment treaty arbitration” be started. Further, that workshops aimed at “training and developing young counsels of the country in these fields” be organized on priority.
  • The Committee recommends that the concerned Ministries/Departments, should “make all out efforts to draft BITs cautiously leaving no scope of investment disputes and reduce the number of BIT claims against India”. Further, that steps be taken to settle disputes “outside of arbitration/before it proceeds to arbitration or comes up before the Tribunals” through a mechanism of pre-arbitration consultation/negotiation.
  • The Committee recommended that the MEA being a part of the Inter-Ministerial Group handling investment treaty disputes, should “take proactive steps for better coordination and strengthening of the IMG”.
  • That the New Delhi International Arbitration Centre should be promoted and strengthened to become a “widely accepted” “world class” arbitration centre.
  • The Committee urges that the Host Country Agreement with the Permanent Court of Arbitration (PCA) be implemented at the earliest and requested to be “apprised of the endeavours made by the Ministry and the result thereof, at the earliest”.
  • The Committee, therefore, recommend that the concerned Departments/Agencies should work towards developing domestic talent in the form of panel of domestic lawyers and law firms who will have the requisite expertise and experience to represent India successfully in investment treaty arbitrations.
  • To attract more FDIs, the Committee recommended that the signing of BITs be “encouraged selectively in identified core/priority sectors/areas” and that such core/priority sectors be identified by the concerned Ministries/Departments/Agencies.
  • The Committee recommends that negotiations on signing BITs/Investment Protection Agreements be started and concluded early so as to contribute towards increasing investment in priority sectors and high technology manufacturing.
  • The Committee desires that review of the Model BIT 2015 should be a continuous process for a balanced and comprehensive BIT.
  • The Committee recommended that continuous efforts be made to remove any ambiguity in the BITs so as to reduce arbitral discretion for varied interpretations.
  • The final recommendation is that an in-depth study may be conducted on the “working and outcome of such treaties adopted by advanced countries and their best practices and provisions may be incorporated in the Indian Model BIT”.

It is to be seen whether the Committee’s recommendations will evolve into a new Model BIT. This space will be watched with great interest by investors and States alike.