Bilateral investment treaty (BIT) between the two countries plays a key role in offering the guarantees on an international level. India entered the concept of BITs in early 1994. In the year 2003, India did release their first Model BIT – an investor-centric model prototype readily used to link BITs with other countries.
However, in the year 2011, the country witnessed turbulence in the model Indian BIT landscape. India was asked by an international arbitral tribunal to pay a fine of an exemplary sum of $3.5 million to White Industries, an Australian investor, for the failure to provide the "effective means of the asserting claims and the enforcing rights" – same standard borrowed from the India-Kuwait BIT into the India-Australia BIT through a provision clause of a most-favoured-nation (MFN). As to mention, that such awards are brought up by the public exchequer.
The same case marked a cataclysmic change in national approach towards BITs. In the year 2015, India has replaced the investor-centric 2003 Model BIT with the new State-centric model. Such as to avert the further damage, India terminated BITs with the 58 countries in the year 2017.
On December 16, 2018, it marked the third anniversary for the release of the new Model BIT as published on December 16, 2015, and came in force on January 14, 2016. However, in between the span of three years, no country barring Cambodia has embraced the 2016 model.
Around the past two decades, India's interest as an investment destination has increased considerably, along with their bargaining power. However, the same also depends upon the stakeholders – the host State, the foreign investor, and, unmissably, the outbound Indian investor.
As being a host State, the Government of India is heavily protected by the terms of the present model. Also, India could now adopt a new range of public policy measures that could adversely affect investor capital. However, the State must also prove that the measures taken were necessary and non-discriminatory in nature, and it would be shrewd to impose additional limits to check the exercise of regulatory powers.
As being a foreign investor, the burden to qualify as an investor under the BIT is inconvenient. Assets will not be easily covered under the multi-valued definition of investment. The foreign investment should legally constitute an enterprise concerning the laws in India. The investor must also prove to have committed capital for a specified duration, calculated risk and assistance in the economic development of India. Unfortunately, there is no procedure to measure these factors.
Furthermore, the most-favoured-nation (MFN) clause provision and the guarantee of 'fair and equitable treatment' is removed from the model. Specified targeted discrimination and fundamental breach of due process by the State is to be considered prohibitive in nature, as the guidance is minimal, and arbitrariness is not covered under the model. The new model doesn’t lay specific representations made by the Government of India to the foreign investors that generate legitimate expectations of investment protection. All such are indispensable guarantees and should to be included.
Lastly, access to justice treads a difficult path. The mandate to first utilize court remedies for starting five years, Afterwards, the nine months to negotiate and initiate arbitration strikes at the very need for effective dispute resolution. As to move two steps forward through the introduction of the Commercial Courts Act and utilization of the Arbitration & Conciliation Act towards speedy and effective adjudication, the provision of such a nature is exceedingly philosophical. A constructive via-media would be present to provide a 30-day revolving period followed by a 6-month mediation at the present. Further, the dispute should then be applied before national commercial courts for a limited timeframe of 18 months. Further upon failure of such, the party could initiate arbitration.
