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14 Manchester JIntl Econ L279
14 Manchester JIntl Econ L279
14 Manchester JIntl Econ L279
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Manchester Journal of International Economic Law
Volume 14, Issue 3: 279-300, 2017
Aniruddha Rajput*
ABSTRACT: India is presently the fastest growing economy and also a prominent capital importer.
Its treaty practice cannot be ignored. The Government of India recently announced a Model
Bilateral Investment Treaty. The underlying characteristicof the Model BIT is conservation of
regulatory autonomy. The Indian Model BIT aims at conserving regulatoryautonomy by employing
five methods. First, the preamble is so structured that an investment tribunal will have to give due
regard to regulatory autonomy. Second, the possibility of review of regulatory actions is reduced
by narrowing the scope of jurisdiction of arbitral tribunals. This is achieved by narrowing the
definition of investment, investor and the scope of the Model BIT. For the first time an enterprise
based definition has been introduced. Thirdly, the scope of treatment standardshas been reduced.
Standards such as fair and equitable treatment, most-favoured-nation and umbrella clause have
been removed and the scope of customary standard, full protection and security, indirect
expropriationand national treatmenthave been reduced. Fourthly, exceptions applicablegenerally
and in specific circumstances have been introduced. Lastly, the access to arbitrationhas been
limited through the need of exhaustion of local remedies.
1. INTRODUCTION
After having released a preliminary draft of a Model Bilateral Investment Treaty (BIT) in April
2015, the Government of India revised the draft and issued the final Model BIT in December
2015.' The new Model BIT is crucial because India is one of the prominent recipients of capital
in the world2 and as per the projections of the International Monetary Fund, it will continue to
grow fast,3 which will keep its appetite for foreign investment high. At the same time there is
outflow of foreign investments from India. Considering India's share in the movement of
* BSL, LLM, PhD. Member, UN International Law Commission; Advocate, Supreme Court of India. The author
would like to thank Mr Vikhyat Oberoi, Mr Sarthak Malhotra and Ms Rouble Sarkar for their prompt and effective
research assistance in preparation of this article.
1 The Model BIT was revised based on comments from public and most importantly, recommendations made by a
study group of the Law Commission of India. The author was a part of the study group. See Law Commission of
India, 'Report No. 260: Analysis of the 2015 Draft Model Bilateral Investment Treaty', August 2015, available at:
http://1awcommissionofindia.nic.in/reports/Report260.pdf (accessed 28 November 2016).
2 UNCTAD, World Investment Report 2016, Investor Nationality: Policy Challenges (United Nations Publication
2016), at 5.
3 See IMF, 'World Economic Outlook: Update', 19 January 2016, at 6, available at: www.imf.org/external/pubs/ft/
weo/2016/update/01/pdf/01 16.pdf (accessed 28 November 2016).
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MJIEL Vol. 14 Iss. 3 2017 Aniruddha Rajput
foreign investment, India is capable of shaping the current policy of investor protection and the
future of investment treaty arbitration. Since the time the Model BIT has been issued, some
literature has been written analysing the BIT. Most of the literature is critical.4 This article
takes a different approach and aims to analyse the Model BIT from its underlying objective of
conserving regulatory freedom and controlling interpretative excesses of arbitral tribunals. The
existing literature has not given due consideration to the necessity of conservation regulatory
freedom. Expansive interpretation of treaties and treatment standards increases the exposure of
host states to investment claims and consequentially threatens regulatory freedom. These
concerns are common to all States. Additionally, the Government of India has cancelled all
prior BITs and used the Model BIT as a basis for further negotiations.
Except a select few, virtually all States enter into BITs. Yet, only a handful of them
release Model BITs.s Also, countries that release Model BITs are mostly developed countries
of the West, which have been traditionally capital exporting. In past, due to their position as
predominantly capital exporting they were at a better bargaining position, and hence capable of
influencing the treaty making practice. This practice of capital exporting States of issuing BITs
is seen as a method for imposing rules of their own preference on other States because the
Model BITs form the basis of negotiations for entering into BITs.6 India is one of the notable
exceptions. India had issued a Model BIT in 1993 and thereafter, in 2003. Many States have
been making efforts towards reforming their Model BITs and BITs to sufficiently protect
regulatory freedom. The Indian Model BIT has used the practices of other States and has
devised various novel methods. This is indeed an important and distinct contribution towards
reforms in the BITs from the perspective of protection of regulatory freedom.
Model BITs are non-binding instruments but they have an important role in the law and
policy of international investment law. Treaty negotiations normally take place on the basis of
Model BITs. They are an expression of the policy orientation of the State towards foreign
investment: representing important issues such as the extent and conditions of foreign investor
protection and the nature of dispute resolution procedure contemplated. Most importantly they
represent state practice of that State and could be an aid for interpretation. The Indian Model
BIT represents disagreement with the expansive interpretative approach of investment tribunals
and the need to conserve regulatory space.
There are certain elementary aspects that need to be kept in mind before analysing the
Indian Model BIT to understand the manner in which it seeks to conserve regulatory space. The
4 Lise Johnson, Lisa Sachs and Jesse Coleman, 'International Investment Agreements, 2014: A Review of Trends
and New Approaches', in Andrea K. Bjorklund (ed.), Yearbook on InternationalInvestment Law and Policy: 2014-
2015 (Oxford University Press, 2016) 15-64, at 25-7; Grant Hanessian and Kabir Duggal, 'The 2015 Indian Model
BIT: Is This Change the World Wishes to See?', ICSID Review - ForeignInvestment Law Journal,Fall 2015, 30(3):
729-40; Kabir Duggal, 'The Changing Landscape of Investor-State Arbitration in India', Jindal Global Law Review,
October 2016, 7; see also Prabhash Ranjan, 'Investment Protection and Host State's Right to Regulate in Indian
Model Bilateral Investment Treaty 2015: Lessons for Asian Countries', in Julian Chaisse et al. (eds.), Investment
Law Arbitration in the Asia Pacific Region - Current Practice, Emerging Issues, Future Prospects (Cambridge
University Press, 2017) (forthcoming).
' For the list of states issuing Model BITs, available at: http://www.italaw.com/investment-treaties (accessed 28
November 2016).
6 Stephan Schill, The Multilateralizationof InternationalInvestment Law (Cambridge University Press, 2009), at
90-1.
280
India's Regulatory Autonomy: New Model BIT
2. INTERPRETATIVE SUPPORT
The preamble is not just an introduction to a treaty, but it also spells out the course the treaty is
expected to take. Therefore, preamble is an important contributor to treaty interpretation. A
preamble constitutes, inter alia, 'context' for treaty interpretation. ' Context is important
because a treaty is to be interpreted by giving ordinary meaning to the treaty in the 'context' of
the treaty, along with the object and purpose of the treaty.8 Since the preamble constitutes the
context, it has the capacity to alter the scope of the provisions of a treaty. The preamble of the
Model Indian BIT favours conservation of regulatory freedom in express and implied terms.
There are two sentences that hint towards giving sufficient consideration for regulatory
freedom. These are:
Recognizing that the promotion and the protection of investments of investors of one
Party in the territory of other Party will be conducive to the stimulation of mutually
beneficial business activity, to the development of economic cooperation between them
and to the promotion of sustainable development.
The second sentence is a clear and direct statement regarding regulatory freedom as
compared to the first sentence. The first sentence subtly contributes towards preserving
regulatory freedom by aligning investments with the objective of sustainable development. The
first sentence marries the concept of protection of investment and promotion of business
Vienna Convention on the Law of Treaties (opened for signature 23 May 1969, entered into force on 27 January
1980), ('VCLT') art. 31(2).
Ibid., art. 31(1); see Ronald S. Lauder v. The Czech Republic, UNCITRAL, Final Award, 3 September 2001, para
292; CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/O1/8, Award, 12 May
2005, para 274.
9 Government of India, 'Model Text for the Indian Bilateral Investment Treaty', 2015, available at:
http://finmin.nic.in/reports/ModelTextIndiaBIT.pdf (accessed 27 November 2016), ('Indian Model BIT')
Preamble.
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activity with the goals of economic development. The Indian Model BIT have twin objectives:
facilitating flows of investment and at the same time, contributing towards the economic
development of the host State. This sentence would be influential while interpreting definition
of investment. Presence of reference to development in the preamble would be the basis to
interpret that the investment should contribute towards economic development of the host state.
It is not possible to quantify the extent of contribution towards economic development but those
business activities that are incapable of making any contribution towards economic
development would be excluded. For example, due to this clarification, law firms set up in the
host State or salvaging activity of wrecks, etc. may not satisfy this criterion.
At the same time, the inflow of investments is expected to be in synchronization with the
objectives of sustainable development. Aligning foreign investments with the goals of
sustainable development has been one of the burgeoning concerns of the international
investment law. 10 The requirement of aligning foreign investments with sustainable
development would allow the host State to undertake regulations for achieving sustainable
development goals. " New generation BITs normally contain a reference to sustainable
development in their preamble. 12 The Indian Model BIT is in consonance with the practice of
other States. Therefore, the first sentence could provide contextual interpretative support for
the host State to undertake regulations necessary to ensure sustainable development.
The second sentence directly and clearly puts regulatory concerns to the forefront. By
starting with the word 'reaffirming', it is making it clear that the regulatory freedom is already
extant and the reference made to it in the preamble is only a reconfirmation of its existence.
The preamble gives the host State a wide degree of latitude for regulating investments. It could
do so as per its law as well as its policy. Law has specific meaning: legislative or based on
judicial precedent. But policy is broad, and regulations can be based on various policy
considerations which need not be formalistic or traceable to law each time.
The preamble of the new Model Indian BIT is a departure from the past practice of scant
preambles. Other States have also started adhering to the practice of detailed preambles with a
clear statement on the objectives it intends to achieve. In the earlier treaties, when the preambles
were sketchy, there was a tendency amongst tribunals to interpret that the BIT was primarily
aimed at protecting the interests of foreign investors because there was no specific reference to
regulatory freedom in the preamble.13 The Model BIT negates the possibility of such an
interpretation. It clearly states that the investments should contribute towards development and
10 See Marie-Claire Cordonier Segger, Markus W. Gehring and Andrew Newcombe (eds.), Sustainable
Development in World Investment Law (Wolters Kluwer: Law & Business, 2011); Perry E. Wallace, 'International
Investment Law and Arbitration, Sustainable Development, and Rio+20: Improving Corporate Institutional and State
Governance', SustainableDevelopment Law and Policy, 2012, 12(3): 22-56.
11 Howard Mann, 'Reconceptualising International Investment Law: Its Role in Sustainable Development', Lewis
& Clark Law Review, 2013, 17(2): 521-44, at 537, 540-1, 543.
12 Mali ForeignInvestment Promotion and ProtectionAgreement (signed 28 November 2014, entered into force on
8 June 2016), Preamble; Agreement Between Canada and the Republic of Cameroon for the Promotion and
Protection of Investments (signed 3 March 2014), Preamble; Canada-Cbte d'Ivoire Foreign Investment Promotion
and ProtectionAgreement (signed 30 November 2014, entered into force on 14 December 2015), Preamble.
13 Siemens A.G. v. The Argentine Republic, ICSID Case No. ARB/02/8, Decision on Jurisdiction, 3 August 2004,
para 81; SGS Societ Generale de Surveillance S.A. v. Republic of the Philippines, ICSID Case No. ARB/02/6,
Decision of the Tribunal on Objections to Jurisdiction, 29 January 2004, para 116.
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India's Regulatory Autonomy: New Model BIT
the host State can adopt regulations based on its law and policy, and the investments have to be
aligned with the objective of sustainable development. Therefore, the preamble of the Model
BIT provides interpretative support to the position that the treaty shall be interpreted in a
manner that is aligned with conservation of regulatory freedom rather than mere investor
protection.
The preamble in this case provides adequate defence for regulatory measures by the host
State. At the same time, the Model BIT through a substantive provision cements regulatory
freedom. Through Article 23, the Model BIT directs that an arbitral tribunal shall give high
level of deference to action undertaken by the host State for achievement of its developmental
objectives." The provision starts with the word 'shall', and contemplates not only deference
but also high level of deference. The requirement of granting high level of deference is a part
of the governing law, the arbitral tribunal has to treat this requirement as a substantive legal
requirement.
Therefore, a cumulative reading of the preamble and Article 23.1 of the Model BIT
represents that there is adequate interpretative support stipulated in the Model BIT to ensure
that the regulatory freedom would be protected.
The first substantive requirement to be satisfied for accessing investment arbitration is that of
jurisdiction. An arbitral tribunal would have to be satisfied that it possesses jurisdiction to
entertain the dispute. By narrowing the jurisdiction, a BIT reduces the access of the foreign
investor to investment arbitration. Therefore, narrower the jurisdiction of the arbitral tribunal,
broader will be the regulatory space for the host State. The Model BIT employs two
methodologies for narrowing the jurisdiction: narrowing the definitions clause and narrowing
the scope of the Model BIT.
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investor has to establish that the investor has made a qualified investment - which is determined
on the basis of the definition of 'investment'. There are three features of the definition of
investment in the Indian Model BIT. First, enterprise based definition; second, objective
requirements of an investment; and third, exclusion of certain activities from the definition of
investment.
Almost all BITs of other States follow the open-ended asset based definition.16 Even the
2003 Model BIT17 and other BITs" entered into by India adopted an asset based definition.
The asset based definition would normally contain a list of assets that may be treated as
investment, such as: movable and immovable property, shares, stock, bonds, intellectual
property rights, right to receive money, etc. This is an open-ended definition since it provides
kinds of assets that would be treated as investment. Furthermore, the list of assets mentioned is
non-exhaustive. The effect of an open-ended non-exhaustive definition is that even those kinds
of assets, not mentioned in the definition, would be included - it would not matter whether they
are related to property.19 An open-ended non-exhaustive definition is capable of treating even
those engagements with the host State as investment, which would otherwise not be treated as
investment.20 Open-ended asset based definition broadens the jurisdiction of arbitral tribunals.
The UNCTAD had advised States to adopt a closed list definition.21 Such a definition would
limit protection to only those kinds of investments that are mentioned in the list of protected
investments. The Indian Model BIT adopts a closed list approach and goes a step further by
introducing an enterprise-based definition.
The Indian Model BIT defines investment as an 'enterprise constituted, organized and
operated in good faith by an investor in accordance with the law of the host state'. 22 An
enterprise has been defined in turn as a legal entity that is 'constituted, organized and operated
in compliance with the law' of the host State; and includes any company, corporation, limited
liability partnership or a joint venture and a branch of any such entity constituted in accordance
with the laws of the host State. 23 The Model BIT aims to protect the assets of such an enterprise,
16 For example, see North American Free Trade Agreement (entered into force on 1 January 1994) ('NAFTA'), art.
1139.
" Government of India, 'Indian Model Text of the BIPA', 2003, available at: www.italaw.com/sites/default/files/arc
hive/ital026.pdf (accessed 27 November 2016) ('Indian Model BIT 2003'), art. 1(b).
s For example see Agreement Between the Government ofAustralia and the Government of the Republic of India
on the Promotion and Protection of Investments (signed 26 February 1999, entered into force on 4 May 2000)
(Hereinafter 'India-Australia BIT'), art. 1(c); Agreement Between the Government of the Republic of India and the
Government of the People's Republic of China for the Promotion and Protection of Investments (signed 21
November 2006, entered into force on 1 August 2007) ('India-China BIT'), art. 1(b); Agreement Between the
Government of the Republic of India and the Government of Malaysia for the Promotion and Protection of
Investments (signed 1 August 1995, entered into force on 12 April 1997) ('India-Malaysia BIT'), art. 1(a).
19 Rudolf Dolzer and Christoph Schreuer, Principlesof InternationalInvestment Law ( 2nd ed., Oxford University
Press, 2012), at 60-1.
20 For example, a tribunal held that setting up of a law firm in the host state amounted to investment and it satisfied
the requirements of jurisdiction. Patrick Mitchell v. Democratic Republic ofthe Congo, ICSID Case No. ARB/99/7,
Extracts of Award (9 February 2004), paras 46-8. This finding was overturned by the Ad hoc annulment committee
in its decision, PatrickMitchell v. Democratic Republic of the Congo, ICSID Case No. ARB/99/7, Decision on the
Application for Annulment of the Award (1 November 2006), paras. 40-1.
21 UNCTAD, Scope and Definition: UNCTAD Series on Issues in InternationalInvestment Agreements II (United
Nations Publication 2011), at 10, 34-6. For closed list approach, see Canada Model BIT, 2004, available at:
www.italaw.com/documents/Canadian2004-FIPA-model-en.pdf (accessed 27 November 2016), art. 1.
22 Indian Model BIT, art. 1.4.
23 Indian Model BIT, art. 1.3.
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India's Regulatory Autonomy: New Model BIT
which may be in the form of shares, stock, other equity instruments, debt instruments, licenses,
long-term contracts, copyrights, technical know-how, etc.24 To fall within the definition of
investment - unlike past - falling within one of the categories of investment is not adequate,
the investment has to be made in an enterprise. The benefit of the enterprise based definition is
that the BIT would protect only those investment activities where the foreign investor has a real
and effective presence in the host State. Therefore, only those investors actively present in the
host State that are affected by a regulation would be covered by the BIT.
The investment should be made in 'good faith' and constituted, organized and operated
in accordance with the laws of the host State.25 The specific reference to good faith would
ensure that the foreign investor has created a physical presence for indulging into a serious
activity in the host economy and not for simply seeking benefit of the BIT or the dispute
resolution clause therein. An investor cannot claim protection by establishing an office in the
host State without any actual and real intention to conduct investment related activity in the
host State. Additionally, the investment has to be in accordance with the laws of host State at
all times. This requirement is often referred to as the absence of illegality in investment law26
and has been implied to exist, even if not specifically mentioned.27
An associated problem with the asset based definition that results into expansion of the
definitions clause to assert jurisdiction, is whether the categories of investments stipulated in
the definition of investment are by themselves adequate to constitute investment; or there is a
need of further objective criteria. The debate about the need of an objective criteria for
determining whether the activity amounts to investment has played out in detail in the context
of Article 25 of the Convention on the Settlement of Investment Disputes Between States and
Nationals of OtherStates (ICSID Convention). In the famous Salini case, the tribunal held that
for a dispute to fall within the purview of ICSID Convention, there is a need of satisfaction of
objective criteria of investment, which are: contribution by the foreign investor to the host
economy, a certain duration of existence, undertaking risk of the transaction and contribution
to economic development.2 8 The presence of these objective elements ensures that the foreign
investor has made an actual investment in good faith and is contributing into the host State
economy. A tribunal accepted the application of the Salini test into non-ICSID arbitrations.2 9
But in White Industries v Australia, the tribunal declined to apply the Salini test outside ICSID
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cases.3 0 Therefore, whether or not a tribunal would apply the objective test is unclear. The
Model BIT removes such a possibility by incorporating the Salini test in the definition of
investment. It requires that the assets of the enterprise should have:
In addition to providing an enterprise based definition with the need to satisfy objective
requirements, the Model BIT excludes certain categories of investments. The exclusion list
further narrows the scope of the definition of investment. Shares held in an enterprise amount
to an investment but, shares held simply on the share market as a portfolio are excluded.32
There are good policy reasons for excluding portfolio investments from the definition of
investment because they are merely speculative investments without any intention to hold on
to them or contributing towards the presence and economic development of the host State.33
Moreover, the investors regularly suffer losses due to movements in the market caused by
regulations adopted or even announced by States. By excluding portfolio investments the
chances of the host State being sued for regulations which result into losses in the share market
are excluded.
Another category of investments that could result into challenges to regulatory actions
of the host State relate to government bonds. Often in cases of government debt crises,
governments are required to adopt various regulations that affect the entitlements of
government bond and security holders. 34 The process of renegotiations between the
government and the creditors is complex. Normally, the debts are renegotiated. If some of the
creditors can access investment arbitration, then they could indulge into hold out litigation and
hamper the prospects of renegotiations. In the case of Argentina, a tribunal has found that the
bondholders could initiate arbitration based on the BIT. 3 Therefore allowing access to
bondholders to investment arbitrations is problematic. 36 The Indian Model BIT excludes
government bonds and other security interests from the definition of investment.37
30 White Industries Australia Limited v. The Republic of India, UNCITRAL, Final Award (30 November 2011),
paras 7.4.8-7.4.9.
31 Indian Model BIT, art. 1.4.
32 Indian Model BIT, art. 1.4(i).
3 Aniruddha Rajput, 'Defining "Investment": A Developmental Perspective', Indian Journal of ArbitrationLaw,
2013, 11(1): 12-32. See also M. Sornarajah, 'Portfolio Investments and Definition of Investment', ICSID Review
-
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India's Regulatory Autonomy: New Model BIT
from the definition of investment. 38Also, the protection of the treaty generally is not extended
to pre-investment activity.39 Pre-investment activity is defined as activities undertaken prior to
establishment of the investment for 'compliance with sectoral limitations on foreign equity, and
other limitations and conditions applicable under any law relating to the admission of
investments' in the host country. 40 If protection is allowed to pre-operational activity then the
regulatory freedom of the State would be constrained by an investment which has not even
taken place yet. Tribunals have taken contradictory approaches relating to pre-investment
activity. 41
Claims arising out of purely commercial transactions or extension of credit for those
transactions are excluded from the definition of investment.4 2 Commercial transactions as it is
are excluded from the scope of investment arbitration because the objective of investment
treaties is not to protect purely commercial transitions.4 3 Yet in some cases, commercial
transactions have been elevated to treaty claims. The provision in the Model BIT clarifies the
position so that an investment tribunal is constrained from including them within investment.
If claims arising out of commercial transactions are allowed, then all commercial disputes
would get transferred into investment claims. A wider set of regulations would then get covered.
The Model BIT excludes claims to money arising out of commercial transactionS 45 and
a judgment or order, which is an outcome of judicial, administrative or arbitral proceedings.46
In White Industries v India, claims to money were considered to be wide enough to include an
unenforced commercial arbitration award.47 In Saipem v Bangladesh, the host State was found
responsible for issuing injunction against arbitration proceedings.48 If the foreign investor is
involved in a commercial transaction with the government and has a commercial arbitration
award in favour, then the investor could claim protection under the BIT. This naturally expands
the access to investment arbitration. Therefore, claims to money as well as judicial decisions
are excluded from the definition of investment. Even the US Model BIT adopts the same
approach.49
In summary, to qualify as investment, the necessary attributes in the Model BIT have to
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MJIEL Vol. 14 Iss. 3 2017 Aniruddha Rajput
be satisfied and then it has to be seen that the kind of investment is not excluded, only then can
a foreign investor successfully complete the ratione materiae requirement of jurisdiction.
The Indian Model BIT also contains denial of benefits clause. The denial of benefits
clause allows the host State to deprive protection to the investors if they actually do not belong
to the other party to the BIT. 5 Also, if the investment is established or restructured for the
primary purpose of gaining access to the dispute resolution procedures under the BIT, then the
benefit of the BIT would be denied. 6
so Complications arise only if the foreign investor has dual nationality. Tribunals have taken inconsistent view. For
a discussion on the relevant cases, see Dolzer and Schreuer (2012), supra note 19, 45-7.
s Indian Model BIT 2003, art. 1 (a), (c); Agreement Between the Government of the Republic of India and the
Government of the People'sRepublic of Bangladeshfor the Promotion and Protection of Investments (signed 9
February 2009, entered into force on 7 July 2011) ('India-BangladeshBIT'), arts. 1 (a), (c); India-China BIT, art.
1(a)(ii); Agreement Between the Government of the Republic of India and the Government of the Kingdom of
Denmark Concerningthe Promotion and Reciprocal Protectionof Investments (signed 6 September 1995, entered
into force on 28 August 1996) ('India-DenmarkBIT'), art. 1(6).
52 See Fai de Swart, 'The Use of Mailbox Companies in International investment Protection', European Company
Law, 2015, 12(1): 19-25; Roeline Knottnerus and Roos van Os, 'The Netherlands: A Gateway to 'Treaty Shopping'
for Investment Protection', Investment Treaty News, 12 June 2012, available at: www.iisd.org/itn/2012/01/12/the-
netherlands-treaty-shopping/ (accessed 28 November 2016).
5 See Schill (2009), supra note 6, 221-36.
5 Indian Model BIT, art. 1.5.
s Indian Model BIT, art. 35(i).
56 Indian Model BIT, art. 35(ii).
288
India's Regulatory Autonomy: New Model BIT
The Model BIT excludes actions taken by local governments.o Local government
includes '[a]n urban local body, municipal corporation or village level government' or 'an
enterprise owned or controlled by an urban local body, a municipal corporation or a village
level government'.62 This exclusion is important in the Indian context. India is a vast country
with subdivision of power and responsibilities of governance at three levels: central, provincial
and local. A lot of activities are relegated to local governments.6 3 It is not possible to centrally
control or introduce complete uniformity in the actions of the local government. A foreign
investor would interact with the local government on a regular basis for seeking permissions,
licenses and other authorizations. Any failure on the part of local government to satisfy the
demands of the foreign investor would lead to violation of the BIT and responsibility of the
entire State. This exclusion automatically reduces the situations where India may be sued.
" Indian Model BIT 2003, art. 2. See also Agreement between the Government of the Republic of India and the
Government of Ukrainefor the Promotion and Protection of Investments (signed 1 December 2001, entered into
force on 12 August 2003) ('India-UkraineBIT'), art. 2; Agreement Between the Government ofthe Republic ofIndia
and the Government of the Kingdom of Sweden for the Promotion and Reciprocal Protectionof Investments (signed
4 July 2000, entered into force on 1 April 2001) ('Sweden-India BIT'), art. 2; Agreement Between the Government
of the Republic of India and the Government of the Kingdom of Thailandfor the Promotion and Reciprocal
Protection of Investments (signed on 10 July 2000, entered into force on 13 July 2001) ('Thailand-IndiaBIT'), art.
2.
s Indian Model BIT, art. 2.1.
5 The manner in which MFN and FET have been applied to expand the scope of the BIT are discussed below.
60 Indian Model BIT, art. 2.4(i).
61 Indian Model BIT, art. 1.7(i).
62 Ibid.
63 See Constitution of India 1950, Parts IX and IX A.
64 See Asif H. Qureshi 'The freedom of a State to legislate in fiscal matters under general international law', Bulletin
for InternationalFiscalDocumentation, January 1987, 41(1): 14-21, and 'Coherence in the Public International Law
of Taxation: Developments in International Taxation and Trade & Investment Related Taxation', Asian Journal of
WTO & International Health Law and Policy, 2015, 10: 193-222; B. A. Wortley, Expropriation in Public
InternationalLaw (Cambridge University Press, 1959), at 45; Restatement of the Law Third, ForeignRelations Law
of the UnitedStates (The American Law Institute, 1987), Vol. 1, at 201.
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is facing claims challenging regulatory exercises relating to taxation. 65 The Model BIT
excludes 'any taxation measure"' from the scope of the BIT. Furthermore, the host State
retains the right to declare at any stage of the arbitral proceedings that the measure under
challenge is a subject matter of taxation. Once such a declaration is made, the arbitral tribunal
cannot proceed with the case. However, the host State will have to establish that the measure
in question relates to taxation, otherwise this provision would be amenable to misuse.
Therefore, the host State is free to adopt taxation regulations of its choice without the threat of
them being challenged before an investment tribunal.
India has a large market of generic drugs. The manufacture of these drugs is justified on
the basis of compulsory licensing regime created under Article 31 of the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS). The Supreme Court of India has
upheld the manufacture of generic drugs on the basis of compulsory licensing.6' Earlier BITs
did not contain any provision for exclusion of compulsory licensing. The Model BIT excludes
actions undertaken for compulsory licensing from the scope of the BIT.69
Another area where the foreign investors often participate is of government procurement.
The Model BIT excludes government procurement activity from the scope of the BIT. 0
Therefore, a lot of investment activity is excluded from the scope of protection. The government
can freely undertake regulations that affect foreign investors in relation to their participation in
government procurement.
In India, the judiciary is very active.71 The judiciary is responsible for reviewing the
regulatory actions of the government. In India's case, the judiciary itself passes decisions which
are regulatory in nature.72 An investment tribunal is entirely divested from the jurisdiction to
review the merits of a judicial decision of a judicial authority in the host State.73 Investment
tribunals have reviewed decisions of host States in the past.74 The Model BIT protects
regulatory exercises by the executive, as well as the judiciary - a phenomenon peculiar to India.
The Model BIT introduces the rule of exhaustion of local remedies. A claim must be first
submitted before relevant domestic court or administrative body of the host State. The domestic
court or administrative body has to be approached within one year from the date of knowledge
65 Luke Eric Peterson, 'As Vodafone Sues India - And Nokia Threatens the same - Company Could Seek Interim
Arbitral Order Blocking India from Pursuing Billions in Taxes', Investment Arbitration Reporter, 13 May 2014,
available at: https://www.iareporter.com/articles/as-vodafone-sues-india-and-nokia-threatens-the-same-company-
could-seek-interim-arbitral-order-blocking-india-from-pursuing-billions-in-taxes/ (accessed 28 November 2016).
66 Indian Model BIT, art. 2.4 (ii).
67 Ibid.
68 NovartisAg v. Union of India, (2013) 6 SCC 1.
69 Indian Model BIT, art. 2.4 (iii).
70 Indian Model BIT, art. 2.4 (iv).
71 See generally Austin Granville, Working a Democratic Constitution:A History of the Indian Experience (Oxford
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India's Regulatory Autonomy: New Model BIT
of the measure in question. 5 Interestingly under domestic law of India, the period for filing a
claim before domestic courts is normally of three years from the date of the cause of action. 6
It is further clarified that 'the investor shall not assert that the obligation to exhaust local
remedies does not apply or has been met on the basis that the claim under this Treaty is by a
77
different party or in respect of a different cause of action. The exhaustion of local remedies
rule is inapplicable if the investor can show that no local remedies are available or that they are
incapable of providing relief.78 The incapacity to provide relief can become a ground to argue
that the relief, if obtained from the host State, may be after a long delay. In such cases, the
exhaustion of local remedies rule would not apply. The foreign investor cannot invoke
arbitration unless five years have passed from the date when the investor first acquired
knowledge about the measure.79 Only after this period, arbitration notice could be sent. Once
0
the notice is sent there is a mandatory cooling off period of six months. If the parties fail to
settle disputes amicably, then arbitration proceedings could be invoked. Additionally, not more
than six years should have lapsed from the date of first acquiring knowledge of the measure.
If the host State succeeds in dragging negotiations beyond one year, then the possibility of
arbitration would be excluded. Also, not more than twelve months should have passed since the
conclusion of domestic proceedings.82 These provisions have the effect of giving the courts of
the host State an opportunity to decide the case first, and if the courts hold in favour of the
investor, then no arbitration would be required. If the host State courts fail to redress the
concerns, only then can an investment tribunal look into State action. The time period could
also serve as an incentive for the investor and the host State to negotiate and settle the dispute.
The objective of treatment standards is to control activities of States. In the past, treatment
standards used to be sketchy. This was treated as an authorisation for investment tribunals to
interpret those clauses broadly to achieve investor protection. In response, the Model BIT
contains detailed provisions on treatment standards and all aspects of the treatment standard are
described in detail. The general tenor of the treatment standards is narrow in comparison to
prior BITs. The Indian Model BIT uses two methodologies for enhancing regulatory freedom:
removal of controversial treatment standards and narrowing existing treatment standards.
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Tribunals have interpreted FET liberally and flexibly to hold host States responsible for
violation of due process and other general principles of international law. 84 There are three
principal concerns about the interpretation and application of FET: FET lacks precise content
and therefore the tribunals enjoy the discretion to interpret it broadly; whether FET is tied to
the customary international standard of international minimum standard; and if FET is
equivalent to international minimum standard, then has that customary law standard evolved?
Tribunals have interpreted FET as a free standing provision, separate from the
international minimum standard. States have expressed disagreement over such an
8
interpretation.s Even where the FET has been specifically tied to the international minimum
standard, the tribunals have held that the international minimum standard is by itself an
evolutionary principle and has undergone lot of change over time.8' The FET is interpreted,
especially in the form of a free standing provision, to impose an obligation on States to actively
promote and stimulate foreign investments and create conducive environment for those
purposes.8 7 The FET is said to create an expectation in the minds of the investor that the host
State would not alter the regulatory framework which existed when the foreign investor entered
the host State.88 Such an interpretation has the effect of freezing the regulatory framework and
restraining the host State from making any changes to its laws. An important constituent of the
FET is legitimate expectations of the foreign investor. The legitimate expectations would
depend on the regulatory framework existing in the host State at the time of entry. Tribunals
have held that once such expectations are formed on the basis of the regulatory framework at
the time of entry, then the host State cannot change it to prejudice the interest of foreign
investor. 89 A stable and predictable environment has to be maintained.90 1In some situations,
tribunals have found violation of contractual terms to amount to breach of the FET standard. 91
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India's Regulatory Autonomy: New Model BIT
This may be the trend in the past, but in future, it is expected that investment tribunals
would add further elements to the FET. According to Sornarajah, the contents of the FET laid
down by the tribunals do not have support in the text of the investment treaties and the contents
identified by the tribunals are vague as well. In effect, they open up the possibility of excessive
jurisdiction being exercised by arbitrators, beyond the investment treaty.9 2 As a consequence
of the interpretative approach of investment tribunals towards the FET, the regulatory space of
States will continue to shrink with expanding interpretation of the FET standard.93 The FET
poses a direct challenge to the regulatory space and its removal only heralds the reassertion of
regulatory freedom. The Indian Model BIT does away with the FET altogether. In the past, the
ASEAN Framework Agreement on Investment did not include the FET standard. By excluding
FET, a major basis for challenge to the regulatory freedom is removed.
para 182, SGS Societe Generale de Surveillance SA v. Paraguay, ICSID Case No. ARB/07/29, Decision on
Jurisdiction (12 February 2010), paras 144-51; Mondev InternationalLtd v. United States of America, ICSID Case
No. ARB (AF)/99/2, Award (11 October 2002), para 134.
92 M. Sornarajah, Resistance and Change in the InternationalLaw on Foreign Investment (Cambridge University
Press, 2015), at 254-7.
93 Dolzer and Schreuer (2012), supra note 19, at 160.
94 MTD v. Chile, supra note 87, paras 103-4; Bayindir v. Pakistan, ICSID Case No. ARB/03/29, Decision on
Jurisdiction (14 November 2005), paras 231-2.
95 EmilioAgustin Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/7, Decision on Jurisdiction (25 January
2000), 50-52.
96 UNCTAD, Most-Favoured-NationTreatment: UNCTAD Series on Issues in InternationalInvestment Agreements
II (United Nations Publication, 2010); see Andreas R. Ziegler, 'The Nascent International Law on Most-Favoured-
Nation (MFN) Clauses in Bilateral Investment Treaties (BITs)', in C. Herrmann and J. P. Terhechte (eds.), European
Yearbook of InternationalEconomic Law 2010 (Springer-Verlag, 2010), 77-102.
97 Hochtiefv. Argentina, ICSID Case No., ARB/07/31, Decision on Jurisdiction (24 October 2011), para 67.
98 For example, see Agreement between the Republic of Austria and the Union of Soviet Socialist Republics for
Encouragement and Reciprocal Protection of Investments with an Exchange of Notes (signed 8 February 1990,
entered into force 1 September 1991) ('Austria-USSR BIT'); Belgium and Luxembourg-Czechoslovakia BIT (1989);
Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the
Government of the Union of Soviet Socialist Republicsfor the Promotion and Reciprocal Protectionof Investments
(signed 6 April 1989, entered into force 3 July 1991) ('UK-USSR BIT'); FederalRepublic of Germany and Union
of Soviet Socialist Republics Agreement: Concerning the Promotion and Reciprocal Protection of Investments
(signed 13 June 1989; entered into force 5 August 1991) ('Germany-USSR BIT'); Treaty between the United States
of America and the Republic of Ecuador Concerningthe Encouragementand Reciprocal Protection of Investment
(signed 27 August 1993, entered into force 11 May 1997) ('US-EcuadorBIT'), art. X(2).
99 Dolzer and Schreuer (2012), supra note 19, at 211.
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State negotiated under the BIT based on which they are facing an investment claim. The effect
of broad interpretation of MFN is that a higher mandatory framework is created with the most
onerous provisions and the host State will have to comply with that highest standard. Therefore,
through MFN, a common obligation is imposed on all host States, irrespective of the terms of
the underlying BIT under which the dispute arose. 1oThe addition of new treatment standards
through MFN poses a threat to regulatory freedom.
In White Industries v India, the tribunal held that the Government of India was not
responsible for denial of justice due to long delay of nine years in not enforcing the commercial
arbitration award. 01 Thereafter, the tribunal imported the standard of 'effective means' from
the India-Kuwait BIT on the ground that the India-Australia BIT had an MFN clause.102 The
manner of invocation of the MFN clause was bound to meet with criticism.10 3 The exclusion
of MFN from the Indian Model BIT is a sharp reaction to the jurisprudence on MFN and the
stance of the White Industries Tribunal.
The standards that have been excluded by the Model BIT have been considered as vague
standards and have been interpreted broadly by most tribunals. The practice of tribunals has
introduced uncertainty of approach and allowed greater discretion of arbitrators. Both situations
intimidate regulatory space of States. The Indian Model BIT is responsive to the arbitral
jurisprudence and excludes the controversial treatment standards altogether, thereby, narrowing
the possibility of its use for infringing on the regulatory space of the host State.
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India's Regulatory Autonomy: New Model BIT
"0 Andrew Newcombe and Llufs Paradell, Law and Practice of Investment Treaties: Standards of Treatment
(Wolters Kluwer: Law & Business, 2009), at 2 andl2.
109 Indian Model BIT, art. 3.1 (i).
110 Jan Paulsson, Denial of Justice in InternationalLaw (Cambridge University Press, 2005), at 1-2.
111 Indian Model BIT, art. 3.1 (ii).
112 Dolzer and Schreuer (2012), supra note 19, at 154-6.
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keeps the level of discrimination to at a high threshold. The discrimination has to be based on
gender, race or religious belief. Although the list is not exhaustive, it represents the expectation
that the discrimination should not be ordinary but serious in nature. The fourth ground is
'manifestly abusive treatment, such as coercion, duress and harassment'." 1 This situation covers
situations where the foreign investor is forced out of country by coercion or the properties of
the investor are wrongfully confiscated. These are classic cases of abuse of state power. There
have been such incidences in past. " Except these limitations, the host State is free to
discriminate between the domestic and foreign investor. For example, in Saluka v Czech
Republic, the standard for discrimination was liberal. The host State provided financial support
only to the domestic banks in distress and not to the banks privatized and owned by foreign
investors - the host state was found responsible.1 19 If a high threshold of discrimination is
specified, then, the host State would be justified in not extending the same treatment to foreign
investors as long as it is not with the objective of discrimination on the bases of gender, race or
religious belief. Therefore, the host State retains substantial degree of regulatory space,
including the freedom to take necessary measures to protect domestic investors/industry in
justifiable and appropriate situations.
The overall impact of these provisions is that regulations which were found to be in
violation of the FET would not be so under a treaty based on the Model BIT, where FET does
not exist and the customary international law allows a fair amount of latitude to the host State
to adopt regulations that do not meet the high threshold of discrimination.
A peculiar feature reflected in the treaty is the fear that tribunals may make error on some
fundamental notions of international law. The Model BIT even defines customary international
12 0
law.
Case No. 088/2004, Partial Award (27 March 2007), para 338; Enron Corporationand PonderosaAssets, LP v.
Argentine Republic, ICSID Case No. ARB/01/3, Award (22 May 2007,) para 282; Sempra Energy Internationalv.
Argentine Republic, ICSID Case No. ARB/02/16, Award (28 September 2007), para 319; Occidental Petroleum
Corporationand Occidental Explorationand Production Company v. The Republic of Ecuador, ICSID Case No.
ARB/06/1 1, Award (5 October 2012), paras 167-76.
117 Indian Model BIT, art. 3.1(iv).
118 See Antoine Biloune v. Ghana, UNCITRAL, Award on Jurisdiction and Liability (27 October 1989), 5 ILR 189;
Ahmadou Sadio Diallo (Republic of Guinea v. Democratic Republic of the Congo), (2010) ICJ Rep 639.
119 Saluka Investments BV (The Netherlands), supra note 116, para 358.
120 Indian Model BIT.
121 Asian Agricultural Products LTD (AAPL) v. Republic of Sri Lanka, ICSID Case No. ARB/ 87/3, Final Award
(27 June 1990), para 45; Wena Hotels Ltd v. Arab Republic of Egypt, ICSID Case No. ARB/98/4, Award (8
December 2000), para 84; American Manufacturing & Trading, Inc v. Republic ofZaire, ICSID Case No. ARB/93/1,
Award (21 February 1997), para 6.02.
122 Azurix Corp v. Argentine Republic, ICSID Case No. ARB/01/12, Award (14 July 2006), paras 406-8; Siemens
AG v. Argentine Republic, ICSID Case No. ARB/02/8, Award (6 February 2007), para 303; Compailla de Aguas del
Aconquija SA and Vivendi Universal SA v. Argentine Republic, ICSID Case No. ARB/97/3, Award (20 August
2007), para 7.4.15; FrontierPetroleum Services Ltd v. The Czech Republic, PCA Case, Final Award (12 November
2010). See also Dolzer and Schreuer (2012), supra note 19.
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India's Regulatory Autonomy: New Model BIT
to mean that the host State 'is obliged to ensure that neither by amendment of its laws nor by
actions of its administrative bodies is the agreed and approved security and protection of foreign
investor's investment withdrawn or devalued.' 123 The Model BIT has clarified that full
protection and security standard relates only to physical security and 'not to any other obligation
whatsoever'. 124 The consequence of pushback on the interpretation of full protection and
security would ensure that the host State is not held responsible for regulatory actions.
123 CME Czech Republic BV v. The Czech Republic, UNCITRAL, Partial Award (13 September 2001), para 613.
124 Indian Model BIT, art. 3.2.
125 Dolzer and Schreuer (2012), supra note 19, at 44.
126 PhillipsPetroleum Co Iran v. Islamic Republic of Iran, Award No. 425-39-2, (29 June 1989), (1989) 21; Iran-
USCTR, 79; StarrettHousing Corp v. Government of Islamic Republic of Iran, Concurring Opinion of Holtzman
(19 December 1982), (1983) 4 Iran-USCTR 122; Phelps Dodge Corp v. Islamic Republic of Iran, Award No. 217-
99-2, (19 March 1986), (1987) 10 Iran-USCTR 121; Wena Hotels Ltd v. Arab Republic of Egypt, ICSID Case No.
ARB/98/4, Award (8 December 2000), para 98; InternationalThunderbirdGaming Corporationv. UnitedMexican
States, UNCITRAL, Claimant Statement of Claim (15 August 2003), 101-2; Generation Ukraine Inc v. Ukraine,
ICSID Case No. ARB/00/9, Final Award (16 September 2003), para 20.23; Fireman'sFundInsurance Company v.
United Mexican States, ICSID Case No. ARB(AF)/02/01, Award (17 July 2006) paras 173, 176; Siemens AG v.
Argentine Republic, ICSID Case No. ARB/02/8, Award (6 February 2007), paras 231-73; Biwater Gauff (Tanzania)
Limited v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award (24 July 2008), paras 438, 439, 509;
Rumeli Telekom AS and Telsim Mobil Telekomunikasyon HizmetleriAS v. Republic of Kazakhstan, ICSID Case No.
ARB/05/16, Award (29 July 2008), paras 700-4. For problems associated with the application of the jurisprudence
of the Iran-US Claims Tribunal to investment arbitration cases, see Aniruddha Rajput, 'Problems with the
Jurisprudence of the Iran-US Claims Tribunal on Indirect Expropriation', ICSID Review - Foreign Investment Law
Journal, 2015, 30(3): 589-615.
127Eastman Kodak Company and The Government of Iran, Partial Award No. 329-227/ 12384-3 (11 November
1987) (1987) 17 Iran-USCTR 153, 168-169.?
128 See Ben Mostafa, 'The Sole Effects Doctrine, Police Powers and Indirect Expropriation under International
Law', Australian International Law Journal, 2008, 15(1): 267-96.
129 Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB (AF)/99/1, Award (16 December
2002); Link-Trading Joint Stock Company v Departmentfor Customs Control of Moldova, Final Award (18 April
2002), para 71; EnCana Corporationv. Republic of Ecuador, UNCITRAL, Award (3 February 2006), para 177;
Dames and Moore v. The Islamic Republic of Iran, Award No. 97-53-1 (1983) 4 Iran-US CTR 212; The Oscar Chinn
Case (Belgium v. United Kingdom), PCIJ Series A/B 77, 78 (12 December 1934), (1934).
130 US Model BIT, Annexure A, Annexure B, Clause 4 (a).
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have to be kept in mind while deciding cases on indirect expropriation.13 1 Additionally certain
actions are excluded, such as actions taken by the government in commercial capacity.132 An
investor cannot claim that the loss suffered while competing with a public enterprise acting in
commercial capacity would amount to indirect expropriation. Also, non-discriminatory
regulatory measures or decisions of judicial bodies to protect legitimate public interest or
purposes such as public health, safety and the environment would not constitute
13 3
expropriation. These provision directly protects legitimate regulatory exercises.
5. EXCEPTIONS
The exceptions contained in the Model BIT could be categorized into three: generally
applicable without any time limit; exceptions to protect actions undertaken in situations of
urgency, and exclusion of certain areas from the purview of jurisdiction of tribunals.
The Model BIT contains provisions that make an exception to protect regulatory freedom
exercised for protection of public morals, public order, protection of human, animal and plant
life or health, environment, living and non-living resources, national treasures or monuments
of artistic cultural, historic or archaeological importance. 136 The host State can undertake
regulations for protecting these wide range of subjects. Even if a regulation violates the rights
of the foreign investor, the host State will not be responsible. These measures have to be applied
in a non-discriminatory manner and should be necessary for achieving one of the objectives set
out above. 13 7 As per the necessity test, the host state would have to establish that there was no
less restrictive alternative measure reasonably available.138
Under the Model BIT, the host State can adopt 'non-discriminatory measures of general
application taken by a central bank or monetary authority of a Party in pursuit of monetary and
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India's Regulatory Autonomy: New Model BIT
related credit policies or exchange rate policies.' 139 The Model BIT envisages imposing
restrictions on transfer of funds on a temporary basis. The host State can impose restrictions on
transfer of funds outside the territory of the host State through good faith application of laws,
such as bankruptcy, insolvency, compliance with judicial, arbitral or administrative decisions,
labour laws etc.140 In cases of serious balance of payment situations, transfers may be restricted
temporarily and in exceptional circumstances where the movement of capital threatens to cause
difficulties to macroeconomic management and in particular monetary and exchange control,
restrictions on transfer could be imposed."1
The host State can adopt regulations for the protection of security interests. A tribunal
cannot ask the host State to furnish information that would affect essential security interests of
the host State. 142
The discussion in Section III above related to substantive jurisdictional requirements for
accessing investment arbitration. This section discusses the procedural requirements that have
to be satisfied to access investment treaty arbitration. The legality of the measure of the host
State under international law is a distinct aspect from access to dispute resolution. If the access
to dispute resolution is limited, then the violation of substantive provisions becomes futile.
Procedural obstacles to access judicial settlement would reduce the enthusiasm of the foreign
investor to pursue the remedy. The procedural challenges, along with losing enthusiasm, would
reduce potential challenges to actions of the host State and would have the effect of allowing
several regulatory measures go unchallenged.
7. CONCLUSIONS
The Model BIT of 2015 is vastly different from the 2003 Model BIT. It is long and detailed. It
is drafted keeping in mind the jurisprudence of investment tribunals and experiences of India,
as well as other States. The 2015 Model BIT performs reverse legislation: tries to correct and
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change the jurisprudence developed by investment tribunals. To that extent it represents a shift
146
in treaty practice.
The Model BIT has employed several tools to narrow the exposure of the host State from
investment claims aimed at challenging regulatory measures. The general perspective of
conserving regulatory freedom and the specific tools employed for achievement of that goal are
bound to influence future treaty practice. Considering India's position as the fastest growing
economy and one of the attractive destinations for investment, India can insist on a BIT that
would address its regulatory concerns. China adopted a similar course of action when
investments were gushing in rapidly. China used to allow access to arbitration to foreign
investors to the limited question of determination of amount of compensation. For other issues,
the foreign investor had to approach domestic courts. Once China became a dominant capital
exporter, all the restrictions were removed. 147 Although India does export capital, it is still a
148
heavily capital importing country. The financial impact of losing an investment claim would
be far higher on India than the benefits of foreign investor successfully making an investment
claim against foreign States. Most importantly, India would not be able to maintain many
regulations which it could have in the absence of a liberal investment protection BIT.
India has signed 83 BITs, out of which 74 are in force. Recently, India terminated 47
BITs and renegotiations are ongoing for over 10. It shows that the Government of India is
serious about negotiating on the basis of the Model BIT. At present, India has managed to enter
into a BIT based on the Model BIT with Cambodia. 149 It is difficult to make any definitive
assessment about the potential BITs with other States. However, the enthusiasm towards
investment arbitration does not seem to be as high between States as it was during the last two
15
decades.s The Indian Model BIT, if well received by other States, could shape the future
course of investment arbitration. It would be an interesting scenario where India would shift
from being a rule taker to a rule giver in the field of international investment law.
146 Aniruddha Rajput, 'India's Shifting Treaty Practice: A Comparative Analysis of the 2003 and 2015 Model BITs',
Jindal Global Law Review, 2016, 7: 201.
147 For a detailed discussion, see Stephan W. Schill, 'Tearing Down the Great Wall-Tearing Down the Great Wall
- the New Generation Investment Treaties of the People's Republic of China', Cardozo Journalof Internationaland
ComparativeLaw, 2007),15: 73-118.
148 Foreign direct investment in India amounted to $28 billion in 2013, $35 billion in 2014, and $44 billion in 2015.
See UNCTAD, World Investment Report 2016, (United Nations Publication, 2016), at 5; UNCTAD, World
Investment Report 2015, (United Nations Publication, 2015), at 3.
149 Government of India Press Release, 'Cabinet Approves Bilateral Investment Treaty between India and Cambodia
to Boost Investment', 27 July 2016, available at: http://pib.nic.in/newsite/PrintRelease.aspx?relid=147849 accessed
(29 November 2016).
150 Jose E Alvarez, 'Is the Trans-Pacific Partnership's Investment Chapter the New "Gold Standard"?', Institute for
International Law and Justice Working Paper 2016/3, 2016, at 1-2, available at: https://wp.nyu.edu/megareg/wp-
content/uploads/sites/3134/2016/03/AlvarezIILJ-MegaReg_2016-3.pdf (accessed 29 November 2016).
300