Investment Policy Brief 3, July 2015

India’s Experience with BITs: Highlights from Recent ISDS Cases

This brief argues that there is a case for a review of India’s bilateral investment treaties (BITs). The author recommends that the review should cover, inter alia, issues of more favourable treatment of foreigners compared to locals, and limitations on policy space of the government to address public interest concerns, in particular, those in the areas of public health and environment.

The brief reviews India’s experience with bilateral investment treaties and investor-state dispute settlement. It discusses the dispute with White Industries (WIL), in particular, the issues that the foreign investor had raised while invoking the ISDS provision. This case reveals how in trying to attract foreign investment into their economies, developing country governments have gone too far in protecting investor rights.

The brief points out that foreign investors in exercising rights that have been granted to them under BITs are able to pose serious challenges to the key pillars of the governance structure in host countries, namely, the judiciary and the executive. The author also discusses recent investor-state disputes raised against India, concerning allocation of the airwaves for telecommunication services and concerning tax disputes involving a number of major foreign investors.

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