India may drop local remedies clause in new BITs as UK trade pact nears
NEW DELHI : India is moving away from its 2016 model bilateral investment treaty (BIT) approach in talks with the UK as the two countries look to cut the timeframe for settling investor-state disputes in a new treaty to be signed alongside a free trade pact next month, a person privy to the matter said. The tweak in stance is for “strategically important countries" with which India is seeking closer economic integration after exiting the Regional Comprehensive Economic Partnership (RCEP), a China-led mega trade deal among 15 Asian nations that came into force last year. “Most of the issues in BIT have been settled.
A few more things need to be worked on but it could be finalized along with the India-UK FTA. Both India and the UK have changed their stance during the current negotiations," the person quoted above said. India so far favoured ‘local remedies’ to resolve investment-related legal disputes rather than agree to independent international arbitration after some high-profile losses.
In 2020, the Vodafone Group won an international arbitration case against the Indian government, ending a 13-year-long dispute over India’s $2 billion tax claim. Prior to 2015, India had signed BITs with 83 countries or regions. India suspended BITs with 68 countries/regions with a request to re-negotiate based on the model 2016 BIT while six BITs are still in force.
However, it found few takers, hurting foreign investments. “The concern in [exhaustion of local remedies] clause is the time it takes to settle disputes in India. That is a concern for the countries we are negotiating with.
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