Comparing Investment Provisions in India’s FTAs with India’s Stand-Alone BITs

Abstract

Rising investment treaty arbitration claims against India have resulted in India taking first steps towards a new investment treaty practice. This article argues that this practice should aim at reconciling investment protection with investment regulation. By comparing the formulation of key jurisdictional and substantive provisions in India’s stand-alone bilateral investment treaties (BITs) with those in investment chapters in India’s free trade agreements (FTAs), this article shows that formulations in FTAs investment chapters often present a better textual basis to reconcile investment protection with investment regulation. This could be made part of India’s new investment treaty practice. The article also assesses the provisions in the 2015 draft Model Indian BIT and concludes that the draft tilts the balance too much in favour of the host State’s regulatory power.

The effects of India's bilateral investment treaties termination on foreign direct investment inflows

“…2 India employs a Model BIT as a template, so all BITs are pretty similar. BITs have been signed annually (see Figure 2) as a part of economic liberalization reforms launched in 1991 (Ranjan, 2015). Jandhyala et al (2011) note that such a practice was typical for developing countries at that timethey formed many BITs among themselves without profound concerns about possible economic consequences.…”

“…India employs a Model BIT as a template, so all BITs are pretty similar. BITs have been signed annually (see Figure 2) as a part of economic liberalization reforms launched in 1991 (Ranjan, 2015). Jandhyala et al.…”

“…For comparison, the 2003 Model BIT included 15 articles on seven pages.5 The first termination (the BIT with Argentina) occurred in 2013, but the mass termination started only in 2016 with a peak in March 2017.6 These countries areBahrain, Bangladesh, Bosnia and Herzegovina, Brunei, China, Colombia, Finland, Iceland, Jordan, Kuwait, Laos, Latvia, Libya, Lithuania, Macedonia, Mexico, Mozambique, Myanmar, Saudi Arabia, Senegal, Serbia, Sudan, Syria, Trinidad and Tobago, and Turkey (IISD, 2016).7 India and Taiwan also signed a new agreement on investment (Taipei Times, 2018), but it is not included in the UNCTAD Investment Policy Hub database. As a result, we do not use this country in our evaluations.8 Ranjan (2015) notes that investment provisions in Indian regional trade agreements are similar to BIT provisions in many respects. However, some are more precise.…”

Is South Asia the missing bloc in world trade? An analysis of South Asian FTAs’ compatibility with WTO rules

“…Clear evidence of this is that these countries have only signed comprehensive economic partnership agreements with outside countries, such as Singapore, Japan, Korea and China (Mukherji, 2011). It is also noticeable that India has committed significantly to Southeast Asian countries but has not shown the same level of commitment to concluding FTAs with its South Asian countries (Ranjan, 2015). The other important observation is that agreements on services have only been concluded with countries outside the region.…”