Govt clears revised model text for Bilateral Investment Treaty

Government has approved the revised Model Text for the Indian Bilateral Investment Treaty (BIT), which can provide appropriate protection to foreign investors in India and Indian investors in the foreign country, in the light of relevant international precedents and practices, while maintaining a balance between the investor's rights and the Government obligations.

The Bill seeks to cover the limitation in earlier agreements ensuring that India does not get dragged into international arbitration on any issue settled by a judicial authority. The revised text provides for a refined Investor State Dispute Settlement (ISDS) that requires that foreign investor exhaust local remedies before commencing international arbitration. 

The revised model BIT will be used for re-negotiation of existing BIT and negotiation of future BITs and investment chapters in Comprehensive Economic Cooperation Agreements (CECAs)/ Comprehensive Economic Partnership Agreements (CEPAs) / Free Trade Agreements (FTAs). The essential features of the model BIT include an 'enterprise' based definition of investment, non-discriminatory treatment through due process, national treatment, protections against expropriation, a refined Investor State Dispute Settlement (ISDS) provision requiring investors to exhaust local remedies before commencing international arbitration, and limiting the power of the tribunal to awarding monetary compensation alone.

However, the model text excludes matters such as government procurement, taxation, subsidies, compulsory licenses and national security to preserve the regulatory authority for the government. BIT increases the comfort level and boost the confidence of investors by assuring an equal opportunities and non-discrimination in all matters while providing for an independent forum for dispute settlement by arbitration.