Consider the following statements about Bilateral Investment Treaty (BIT): 1. A BIT is a reciprocal sovereign-to-sovereign guarantee that protects investments and investors of one country in the territory of the other.2. It additionally provides for dispute resolution mechanisms, such as arbitration, and gives investors the right to private action.Which of the statements given above is/are correct? |ForumIAS

Q. Consider the following statements about Bilateral Investment Treaty (BIT):
1. A BIT is a reciprocal sovereign-to-sovereign guarantee that protects investments and investors of one country in the territory of the other.
2. It additionally provides for dispute resolution mechanisms, such as arbitration, and gives investors the right to private action.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: C

Notes:

A BIT is a reciprocal sovereign-to-sovereign guarantee that protects investments and investors of one country in the territory of the other. It additionally provides for dispute resolution mechanisms, such as arbitration, and gives investors the right to private action.

Model BIT:

GoI recognised these issues emerging from its legacy BITs and issued a model BIT in 2016.
The model BIT, which has since formed the basis of various renegotiated BITs, attempted to carve out an exception from liability against measures and laws regarding taxation.
But it was also realised that carving out of such exceptions may not send the right signal to the investment community at large.
Therefore, GoI has added a specific clarification that awards under the new BIT shall be treated as commercial, and will be enforceable under the existing legislative framework in India.

Source: 9 PM Compilation of July, 2021

Post-Mains Strategy Session by Mr. Ayush Sinha | ForumIAS