1 June 2016
INDIA: Government Looks to Update 47 Bilateral Investment Agreements in Move to Limit International Arbitration
In a move designed to ensure that foreign investors are obliged to pursue grievances through the local legal system rather than in the international arena, India has attempted to revisit existing bilateral investment agreements with some 47 countries. It is believed that these treaties were incompatible with the government’s wish to ensure local judicial remedies have been exhausted before any international arbitration is countenanced.
The Indian government is now seeking to renegotiate its existing investment treaties with the 47 nations concerned. This will see any new agreements bought into line with the model Bilateral Investment Promotions Agreement (BIPA) adopted by the cabinet in December 2015. This draft treaty will also serve as the template for all future investment agreements.
According to government sources, all investment agreements that have been in place for 10 years or more will be allowed to lapse, prior to new terms being agreed. In the case of more recently signed investment agreements – including one recently concluded with the UAE - these will remain in force, though they may be revised at a later date.
Over recent years, the India has been found mostly on the losing side in a number of international arbitration proceedings, including actions taken by Deutsche Telekom, Vodafone and Sistema, a leading Russian conglomerate.