India-UAE bilateral investment treaty can broaden scope of trade

Harbouring aspirations of a $5 trillion economy, the Indian government, successful its 2024 Interim Budget promised a renewed propulsion to re-energise economical ties with its commercialized partners. The India-UAE BIT is an important measurement towards fulfilling that promise. It is absorbing to enactment from the substance of the treaty, India’s softened and flexible stance successful amending oregon dispensing with definite covenants from the exemplary BIT. For instance, nether the exemplary BIT, an capitalist was mandated to archetypal edifice to section remedies nether the Indian ineligible strategy for 5 years earlier taking recourse to planetary arbitration. This has been watered down to 3 years nether the India-UAE BIT (Article 17.1). The contented relating to exhaustion of section remedies has been an Achilles bottommost for India successful its negotiations with the UK for the escaped commercialized statement which agelong awaits a breakthrough. One volition person to hold and ticker whether the amendment to this clause volition supply a template for different countries which are besides seeking akin concessions.

Another noteworthy summation is the inclusion of a antagonistic covenant prohibiting investors from availing third-party backing for contesting disputes. Historically, third-party backing successful communal instrumentality jurisdictions specified arsenic India was viewed successful contravention of nationalist argumentation nether the assemblage doctrines of champerty and maintenance. However, these person been importantly diluted to clasp modern economical realities. Even the Supreme Court, successful Bar Council of India v AK Balaji (2018), held that fiscal assistance from an unrelated enactment to a quality would not ipso facto beryllium deemed successful contravention of nationalist policy. A precocious constituted adept committee by the Ministry of Law and Justice successful its study (February, 2024) has adjacent recommended the inclusion of 3rd enactment backing successful our arbitration regime. In that light, a broad prohibition of third-party backing for investor-state disputes runs against the home tide which has started to clasp the concept.

The India-UAE BIT broadens the scope of commercialized by including portfolio investments (Article 1.4) which were specifically excluded successful the exemplary BIT. This would let investors with fiscal holdings to instrumentality recourse nether the BIT and marque immoderate disputes arising therefrom amenable to the investor-state quality colony mechanics (ISDS) nether the BIT. The Global Trade Research Initiative has rightly flagged this contented by stating that it whitethorn summation India’s vulnerability to disputes implicit fiscal instruments, adjacent those that don’t importantly lend to economical development, moving distant from the exemplary BIT’s absorption connected semipermanent investments.

Time volition justice whether the pact has managed to onslaught a good equilibrium betwixt promoting overseas concern and the state’s close to regulate. The discussions connected the projected FTAs with the UK and the EU are astatine an precocious stage. Negotiations with different countries specified arsenic Hong Kong, Australia, Oman, Saudi Arabia and Russia are besides active. Notwithstanding what ensues, for the clip being, fixed India’s disappointing ratings successful declaration enforcement and existent geo-political conundrums, these steps should beryllium viewed successful the close tone which hopefully pave the mode for a robust cross-border economical ecosystem, BIT by BIT.

The writer, a lawyer, is spouse astatine Numen Law Offices