PMO asks Union Ministry of Commerce to examine Model text of Bilateral Investment Treaty (BIT) | Current Affairs | Vision IAS
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    PMO asks Union Ministry of Commerce to examine Model text of Bilateral Investment Treaty (BIT)

    Posted 10 Apr 2024

    2 min read

    • Exercise assumes significance as only 7 nations have accepted the existing model text, and most of the developed nations have expressed reservations on the text with regard to provisions like resolution of disputes.
    • BIT: It is a reciprocal agreement for according protection to investments by nationals and companies of one State in another State.

     

    History of India’s BITs

    • Post 1991 economic reforms and up to 2015, India signed BITs with 83 countries (based on Indian Model BIT, 1993).
    • Since adoption of Model text of BIT 2015, Notices of Termination of BITs based on 1993 Model were issued to 77 countries (till Sep 2021).
    • Recently, India has signed BIT with the UAE in Feb 2024.
    • Model text of BIT: Union Cabinet adopted new Model BIT text in 2015, which replaced Indian Model BIT, 1993.
      • Since then, Model text 2015 is used for (re)negotiations of BITs and investment chapters of FTAs/ Economic Partnership Agreements.

     

    • Key Features of Model BIT 2015
      • "Enterprise" based definition of investment.
      • National Treatment: Similar treatment as domestic investors. 
      • Protection from expropriation (limiting each country’s ability to take over foreign investments in its territory).
      • Corporate Social Responsibility (CSR): Voluntary incorporation internationally recognized standards of CSR by enterprises operating within territory of each Party.
      • Settlement of Disputes: Exhaust local remedies before commencing international arbitration.

     

    • Issues with Model BIT 2015: Skewed in favour of the Government’s regulatory power, ambiguity in certain areas like duration of the enterprise, arbitrary period of 5 years to exhaust local remedies in dispute resolution, etc.
    • Tags :
    • Bilateral Investment Treaty (BIT)
    • Model BIT, 2015
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