Government mulling strong bilateral treaty to revise investment pacts
The government will soon come with a comprehensive model Bilateral Investment Treaty (BIT), which will form basis for fixing shortcomings in existing pacts and negotiations with different countries. Government had decided to come out with a new framework after several multinational firms invoked bilateral investment protection agreements. The model text would be used for renegotiating the BITs and would form basis for new investment protection treaties. As per the proposal, the model BIT may include provisions to limit power of tribunal to award monetary compensation to an aggrieved investor, sources said. The Finance Ministry will move a Cabinet note on the issue soon. An aggrieved investor as per the proposal would have to exhaust all local remedies before initiating international arbitration, they said adding, the changes are aimed at providing balanced investor protection within the overall framework of country's laws and regulations. The revised text would ensure non-discriminatory and national treatment to overseas investors. The model BIT is expected to exclude matters relating to government procurement, taxation, subsidies, compulsory licences and national security. It may also exclude the provisions under which investor were permitted to initiate dispute claim proceedings against the government. India has so far signed 83 Bilateral Trade and Promotion Agreements (BIPA), of which 72 are in force. Global telecom firms, which had lost their 2G licences following a Supreme Court judgement, have slapped notices on the government citing breach of bilateral investment protection pacts. Besides, companies like Vodafone and Nokia, which are tangled in tax disputes too had evoked the BIPA and sent notices to India.
August 18, 2015 | 5:44pm IST.