{"id":83446,"date":"2021-02-18T11:21:27","date_gmt":"2021-02-18T05:51:27","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=83446"},"modified":"2021-02-18T11:21:27","modified_gmt":"2021-02-18T05:51:27","slug":"bilateral-investment-treaty-for-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/bilateral-investment-treaty-for-india\/","title":{"rendered":"Need for a balanced approach on \u2018Bilateral Investment Treaty\u2019 for India"},"content":{"rendered":"<p><b><span data-contrast=\"none\">Synopsis<\/span><\/b><span data-contrast=\"none\">: Sri<\/span><span data-contrast=\"none\">\u00a0L<\/span><span data-contrast=\"none\">anka\u2019s revoke<\/span><span data-contrast=\"none\">d<\/span><span data-contrast=\"none\">\u00a0the<\/span><b><span data-contrast=\"none\">\u00a0East Container Terminal (ECT) agreement<\/span><\/b><b><span data-contrast=\"none\">\u00a0<\/span><\/b><span data-contrast=\"none\">without any valid reason<\/span><b><span data-contrast=\"none\">.\u00a0<\/span><\/b><b><span data-contrast=\"none\">However,\u00a0<\/span><\/b><span data-contrast=\"none\">Indian investors can\u2019t oppose this decision under International Law<\/span><span data-contrast=\"none\">, due to India\u2019s withdrawal from Bilateral Investment treaties (BIT)<\/span><span data-contrast=\"none\">.<\/span><b><span data-contrast=\"none\">\u00a0<\/span><\/b><span data-contrast=\"none\">This calls for adopting a balanced approach towards\u00a0<\/span><b><span data-contrast=\"none\">BIT<\/span><\/b><b><span data-contrast=\"none\">s<\/span><\/b><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">Background:<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">An agreement to jointly develop ECT at Colombo port was signed between Sri<\/span><span data-contrast=\"none\">\u00a0L<\/span><span data-contrast=\"none\">anka, Japan and India in 2019.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">In February 2021, the Sri<\/span><span data-contrast=\"none\">\u00a0L<\/span><span data-contrast=\"none\">aken government pulled out from the agreement.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">This hampered the interest of Indian investors as they can\u2019t approach international tribunal for protecting their interest under India-Sri<\/span><span data-contrast=\"none\">\u00a0L<\/span><span data-contrast=\"none\">anka BIT.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Read more<\/span><\/b><span data-contrast=\"auto\">\u00a0&#8211;\u00a0<\/span><a href=\"https:\/\/forumias.com\/blog\/sri-lanka-writes-off-strategic-colombo-port-deal-with-india-japan\/\"><span data-contrast=\"none\">Sri Lanka Writes Off Strategic Colombo Port Deal With India &amp; Japan|ForumIAS Blog<\/span><\/a><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"none\">India-Sri Lanka Bilateral Investment Treaty<\/span><\/b><span data-contrast=\"none\">:<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">It governs the treatment of foreign investment between two countries on the basis of International Law.\u00a0<\/span><b><span data-contrast=\"none\">India-Sri Lanka Bilateral Investment Treaty<\/span><\/b><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">was signed in 1997.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">It has a provision of\u00a0<\/span><b><span data-contrast=\"none\">Investor-State Dispute Settlement (ISDS)<\/span><\/b><b><span data-contrast=\"none\">.\u00a0<\/span><\/b><span data-contrast=\"none\">It<\/span><span data-contrast=\"none\">\u00a0allows\u00a0<\/span><span data-contrast=\"none\">individual\u00a0<\/span><span data-contrast=\"none\">foreign investors to sue host states in international tribunals if treaty obligations are violated.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">It calls for giving\u00a0<\/span><b><span data-contrast=\"none\">Fair and Equitable Treatment (FET)<\/span><\/b><span data-contrast=\"none\">\u00a0to foreign investments in the host state under\u00a0<\/span><b><span data-contrast=\"none\">Article 3(2<\/span><\/b><span data-contrast=\"none\">).<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">A core component of\u00a0<\/span><b><span data-contrast=\"none\">FET is the <\/span><\/b><b><span data-contrast=\"none\">protection<\/span><\/b><b><span data-contrast=\"none\">\u00a0of legitimate expectations<\/span><\/b><b><span data-contrast=\"none\">\u00a0of investors<\/span><\/b><b><span data-contrast=\"none\">.<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"none\">In International Thunderbird Gaming Corporation v Mexico Case<\/span><\/b><span data-contrast=\"none\">, the concept of legitimate expectations got clarified.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">It is a situation in which the act of the host state creates a reasonable expectation in the mind of the investor to act in line with such expectation.<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">Failure to fulfil such expectations would cause damage to investors.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">I<\/span><span data-contrast=\"none\">ndia- Sri Lanka BIT<\/span><span data-contrast=\"none\">\u00a0also has a\u00a0<\/span><b><span data-contrast=\"none\">survival clause<\/span><\/b><b><span data-contrast=\"none\">\u00a0under Article 15(2)<\/span><\/b><b><span data-contrast=\"none\">.\u00a0<\/span><\/b><span data-contrast=\"none\">It<\/span><span data-contrast=\"none\">\u00a0protects investors interest for 1<\/span><span data-contrast=\"none\">5 years i<\/span><span data-contrast=\"none\">f\u00a0<\/span><span data-contrast=\"none\">the treaty\u00a0<\/span><span data-contrast=\"none\">is\u00a0<\/span><span data-contrast=\"none\">unilaterally\u00a0<\/span><span data-contrast=\"none\">withdrawn by either\u00a0<\/span><span data-contrast=\"none\">party<\/span><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"2\" aria-setsize=\"-1\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"none\">India withdrew from the treaty in 2017<\/span><span data-contrast=\"none\"> due to a high number of ISDS cases filed against it. But survival clause\u00a0<\/span><b><span data-contrast=\"none\">assure<\/span><\/b><b><span data-contrast=\"none\">s<\/span><\/b><b><span data-contrast=\"none\">\u00a0protection to Indian\u00a0<\/span><\/b><b><span data-contrast=\"none\">and Sri Lanka\u00a0<\/span><\/b><b><span data-contrast=\"none\">investors till 2032<\/span><\/b><span data-contrast=\"none\">.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"none\">Why can\u2019t Indian investors sue the Sri Lankan Government <\/span><\/b><b><span data-contrast=\"none\">for\u00a0<\/span><\/b><b><span data-contrast=\"none\">revoking<\/span><\/b><b><span data-contrast=\"none\">\u00a02019 agreement<\/span><\/b><b><span data-contrast=\"none\">?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">Although the act of Sri<\/span><span data-contrast=\"none\">\u00a0<\/span><span data-contrast=\"none\">Lanka to withdraw from 2019 agreement is a clear breach of the principle of legitimate expectation<\/span><span data-contrast=\"none\">. B<\/span><span data-contrast=\"none\">ut the<\/span><span data-contrast=\"none\">\u00a0Indian<\/span><span data-contrast=\"none\">\u00a0investors can\u2019t app<\/span><span data-contrast=\"none\">eal for protection.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"none\">Survival<\/span><\/b><b><span data-contrast=\"none\">\u00a0clause\u00a0<\/span><\/b><span data-contrast=\"none\">gave protection to investments made before\u00a0<\/span><span data-contrast=\"none\">India\u2019s withdrawal from the treaty in<\/span><span data-contrast=\"none\">\u00a02017<\/span><span data-contrast=\"none\">\u00a0and not to investments<\/span><span data-contrast=\"none\">\u00a0after that<\/span><span data-contrast=\"none\">. It is due to this\u00a0<\/span><b><span data-contrast=\"none\">cut-off date t<\/span><\/b><span data-contrast=\"none\">hat investors of 2019 ECT agreement can&#8217;t do much regarding Sri\u00a0<\/span><span data-contrast=\"none\">L<\/span><span data-contrast=\"none\">anka\u2019s withdrawal from the agreement.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><b><span data-contrast=\"none\">Way Forward<\/span><\/b><span data-contrast=\"none\">:<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><span data-contrast=\"none\">India must\u00a0<\/span><b><span data-contrast=\"none\">understand the reciprocal nature\u00a0<\/span><\/b><span data-contrast=\"none\">of BITs. The withdrawal will save it from ISDS claims but would also hamper the interest of Indian investors abroad.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"none\">Decisions of withdrawal need to be taken with greater caution in a post-Covid world where the probability of taking arbitrary actions by foreign governments is quite high.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"none\">The need is to adopt a\u00a0<\/span><b><span data-contrast=\"none\">balanced approach towards BITs\u00a0<\/span><\/b><span data-contrast=\"none\">that doesn\u2019t subject India to multiple ISDS claims nor harm the interests of Indian investors in foreign countries.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Synopsis: Sri\u00a0Lanka\u2019s revoked\u00a0the\u00a0East Container Terminal (ECT) agreement\u00a0without any valid reason.\u00a0However,\u00a0Indian investors can\u2019t oppose this decision under International Law, due to India\u2019s withdrawal from Bilateral Investment treaties (BIT).\u00a0This calls for adopting a balanced approach towards\u00a0BITs.\u00a0 Background:\u00a0 An agreement to jointly develop ECT at Colombo port was signed between Sri\u00a0Lanka, Japan and India in 2019.\u00a0 In February&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/bilateral-investment-treaty-for-india\/\">Continue reading <span class=\"screen-reader-text\">Need for a balanced approach on \u2018Bilateral Investment Treaty\u2019 for India<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[1333,1457],"class_list":["post-83446","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-ir_0","tag-ir_02","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704928087},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/83446","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=83446"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/83446\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=83446"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=83446"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=83446"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}