9 July, 2015
The Indian Government has recently published and sought public comments on a new draft model bilateral investment treaty ("Model BIT"). If approved by the Cabinet, the Model BIT is expected to form the basis for all bilateral investment treaties negotiated by India in the future, and would also serve as a framework to renegotiate existing BITs.
In an apparent reaction to a number of claims that India has faced over the last few years, many parts of the Model BIT appear to be framed as an attempt to limit protections afforded to inbound investors into India, despite the resultant reduction in protections that would then be afforded to outbound Indian investment. For example, there is no "most favoured nation" provision in the Model BIT, and claims based on taxation or provision of non-commercial services by the host state are excluded (perhaps a direct response to Vodafone's BIT claim and the decision in the White Industries award of 2012).
Whilst potentially seeking to limit the scope of investment arbitration claims, the Indian government is taking measures to develop the domestic legal system as it applies to commercial disputes, following a report from the Law Commission of India. Admittedly, this is not the first time the introduction of Commercial Courts has been recommended by the Law Commission, approved by the Cabinet and even presented in Parliament. However, the Government does appear to be interested in reforming the landscape of commercial and investor dispute resolution in India.
For further information, please contact:
Nicholas Peacock, Partner, Herbert Smith Freehills
nicholas.peacock@hsf.com
Alastair Henderson, Partner, Herbert Smith Freehills
alastair.henderson@hsf.com
Donny Surtani, Herbert Smith Freehills
donny.surtani@hsf.com
