{"id":7159,"date":"2017-08-24T18:59:06","date_gmt":"2017-08-24T13:29:06","guid":{"rendered":"http:\/\/blog.forumias.com\/?p=7159"},"modified":"2017-08-24T18:59:06","modified_gmt":"2017-08-24T13:29:06","slug":"india-plans-to-re-calibrate-the-indian-arbitration-law","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/india-plans-to-re-calibrate-the-indian-arbitration-law\/","title":{"rendered":"India plans to re-calibrate the Indian Arbitration Law"},"content":{"rendered":"<p><strong>Context:<\/strong><\/p>\n<p>The recent report of the Justice B.N. Srikrishna committee, constituted to prepare a road map to make India a hub of international arbitration<\/p>\n<p><strong>Introduction:<\/strong><\/p>\n<ul>\n<li>The committee has recommended many changes in Indian arbitration law and institutional mechanisms to promote arbitration in India.<\/li>\n<li>The committee has also recommended on bilateral investment treaty (BIT) arbitration.<\/li>\n<li>The recommendation on BIT assumes importance as India is currently battling 20-odd BIT disputes.<\/li>\n<\/ul>\n<p><strong>What are the various recommendations of Srikishna Committee on BIT?<\/strong><\/p>\n<ul>\n<li>The committee recommended on issues of managing and resolving BIT disputes<\/li>\n<li>For better management of BIT disputes, the committee recommends the creation of an inter-ministerial committee (IMC), with officials from the Ministries of Finance, External Affairs and Law.<\/li>\n<li>It also recommends hiring external lawyers having expertise in BITs to boost the government\u2019s legal expertise.<\/li>\n<li>Creating a designated fund to fight BIT dispute<\/li>\n<li>Appointing counsels qualified in BITs to defend India against BIT claims.<\/li>\n<li>Boosting the capacity of Central and State governments to better understand the implications of their policy decisions on India\u2019s BIT obligations<\/li>\n<\/ul>\n<p><strong>1 &#8211;\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/strong><strong>Recommendation on Dispute Management:<\/strong><\/p>\n<ul>\n<li>For better management of BIT disputes, the committee recommends the creation of an\u00a0<strong>inter-ministerial committee (IMC).<\/strong><\/li>\n<li>It also recommends hiring external lawyers having expertise in BITs to boost the government\u2019s legal expertise.<\/li>\n<li>The most significant recommendation is the creation of the post of an\u00a0<strong>\u2018international law adviser\u2019 (ILA)<\/strong>\u00a0to advise the government on international legal disputes, particularly BIT dispute.<\/li>\n<\/ul>\n<p><strong>2 &#8211; Recommendations on Dispute resolution:<\/strong><\/p>\n<ul>\n<li>The committee recommended establishing a\u00a0<strong>BIT appellate mechanism<\/strong>\u00a0and\u00a0<strong>multilateral investment court.<\/strong><\/li>\n<li>The committee also recommended to establish investor-state dispute settlement (ISDS) mechanism, given in Article 15 of the Indian Model BIT, provides an effective mechanism for settling BIT disputes between an investor and state.<\/li>\n<\/ul>\n<p><strong>What is the meaning of bilateral investment treaty (BIT)<\/strong><\/p>\n<ul>\n<li>An agreement made between two countries containing reciprocal undertakings for the promotion and protection of private investments made by nationals of the signatories in each other&#8217;s territories.<\/li>\n<li>These agreements establish the terms and conditions under which nationals of one country invest in the other, including their rights and protections.<\/li>\n<li>\u00a0This type of investment is called foreign direct investment (FDI).<\/li>\n<li>BIT is the dispute resoultion mechannism. This process is called investor-state dispute settlement.<\/li>\n<\/ul>\n<p><strong>Why BIT is necessary?<\/strong><\/p>\n<ul>\n<li>BITs provide protection against illegal nationalisation and expropriation of foreign assets and other actions by a signatory of the BIT that may undermine the ownership or economic interest of a national of the other signatory.<\/li>\n<li>The purpose of BITs is to stimulate foreign investments by reducing political risk.<\/li>\n<li>A BIT increases the comfort level and boosts the confidence of investors by assuring a level playing field and non-discrimination in all matters while providing for an independent forum for dispute settlement by arbitration.<\/li>\n<li>It will lead to increased foreign investment and that foreign investment<\/li>\n<\/ul>\n<p><strong>What are the Counter arguments against BIT?<\/strong><\/p>\n<ul>\n<li>Investors are driven by important factors like market size, availability of skilled labour, infrastructure and quality of domestic governance institutions, and not so much by the existence of a BIT.<\/li>\n<li>\u00a0All investment leads to development. So the underlying promise of BITs has not been realised.<\/li>\n<li>The costs of BITs are becoming harder to ignore.<\/li>\n<li>An increasing number of disputes have been brought against states to challenge good-faith measures taken in the public interest, such as anti-tobacco legislation, phase-out of nuclear power, environmental regulations, restrictions on development of hazardous waste facilities, domestic decisions regarding the scope of intellectual property rights<\/li>\n<li>\u00a0\u00a0These disputes are costly to litigate and even more costly to lose, and threaten states\u2019 ability to regulate in the public interest.<\/li>\n<\/ul>\n<p><strong>What are the rights and protections included in BIT?<\/strong><\/p>\n<p>They generally include the following rights and protections:<\/p>\n<ul>\n<li>National treatment.<\/li>\n<li>Most-favoured-nation treatment.<\/li>\n<li>Fair and equitable treatment.<\/li>\n<li>Compensation in the event of expropriation.<\/li>\n<li>One of the main protections under a BIT is that it allows foreign investors to sue states directly by submitting claims for breach of the BIT to arbitration rather than to local courts.<\/li>\n<\/ul>\n<p><strong>What are the problems in absence of BIT?<\/strong><\/p>\n<ul>\n<li>The lack of a BIT means the present FDI flow is certainly less than they could have been.<\/li>\n<li>It has generated a rich public debate on its international investment regime.<\/li>\n<li>There are important questions about the purpose and content of investment treaties, both in India and other countries<\/li>\n<li>Law Commission report suggesting that the model BIT was not sufficiently investor-friendly, ignoring key questions and objectives behind India\u2019s transitioning investment policy regime.<\/li>\n<\/ul>\n<p><strong>What are the key aspects?<\/strong><\/p>\n<p>BIT arbitration has three aspects:<\/p>\n<ul>\n<li>Jurisdictional (such as definition of investment),<\/li>\n<li>substantive (such as provision on expropriation) and<\/li>\n<li>Procedural (ISDS mechanism).<\/li>\n<\/ul>\n<p><strong>How India\u2019s\u00a0Bilateral Investment Treaty\u2019s (BIT) with other countries are affecting rights of the tribal people in India?<\/strong><\/p>\n<ul>\n<li>A bilateral investment treaty is an agreement ensuring foreign investor protection and host state regulatory powers.<\/li>\n<li>Though, this has been catalyst in development but has often affected the rights of tribal people in India enshrined in the\u00a0<strong>5th &amp; 6th schedule<\/strong>\u00a0of Constitution and\u00a0<strong>Recognition of Forest Act, 2006<\/strong>.<\/li>\n<li>There has been frequent incidence of\u00a0<strong>dilution of the rights<\/strong>\u00a0conferred to them because of persistent threat on states of\u00a0<strong>Investment Treaty Arbitration<\/strong>\u00a0for enforcement of investor protection in case of project getting stalled due to\u00a0<strong>protest or license<\/strong>\u00a0getting cancelled.<\/li>\n<\/ul>\n<p><strong>India\u2019s BIT:<\/strong><\/p>\n<p><strong>\u00a0Background<\/strong><\/p>\n<ul>\n<li>The first BIT was signed by India on March 14, 1994. Since then, till date, the Government of India has signed BITs with 83 countries.<\/li>\n<li>BITs were largely negotiated on the basis of the Indian Model BIT of 1993.<\/li>\n<li>The Union Cabinet had given its approval for the revised Model Text for the Indian Bilateral Investment Treaty in December 2015.<\/li>\n<li>The revised Indian model text for Bilateral Investment Treaty (BIT) will replace the existing Indian Model BIT.<\/li>\n<li>The revised model BIT will be used for re-negotiation of existing BITs and negotiation of future BITs and investment chapters in Comprehensive Economic Cooperation Agreements (CECAs)\/ Comprehensive Economic Partnership Agreements (CEPAs) \/ Free Trade Agreements (FTAs).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: The recent report of the Justice B.N. Srikrishna committee, constituted to prepare a road map to make India a hub of international arbitration Introduction: The committee has recommended many changes in Indian arbitration law and institutional mechanisms to promote arbitration in India. The committee has also recommended on bilateral investment treaty (BIT) arbitration. The&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/india-plans-to-re-calibrate-the-indian-arbitration-law\/\">Continue reading <span class=\"screen-reader-text\">India plans to re-calibrate the Indian Arbitration Law<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":7162,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-7159","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy-2","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2017\/08\/Arbitration-and-Conciliation-Act-1996-Indian-Kanoon.jpg?fit=1007%2C522&ssl=1","views":{"total":0,"cached_at":"","cached_date":1702638091},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/7159","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=7159"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/7159\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/7162"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=7159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=7159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=7159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}