Bilateral investment treaties (BITs)
Bilateral investment treaties (BITs) are agreements between two countries on having a reciprocal protection, promotion and encouragement of investments in either countries by individuals or companies .
History
First (BIT) was made with UK in 1993 and the latest one was with Brazil in2020.
BITs encourage investors and investments from different countries which boost up the economy .This also enhances the inflow of new technology and modern management skills .The terms ,conditions and rights are given depending on the status of relation with the foreign nation .
Since 1994 India signed many BITs and was successfully moving ahead. But a dispute arised between India and White Industries .
Dispute with White Industries (WI) :
As per the available rights WI went for International arbitration for resolving the dispute in 2012. The result was against India and had to pay for it .This was followed by more disputes .All these lead to the formation of Model BITs in2016.
Model BITs
His was taken as reference for future negotiations. Acoording to this
#)The deputes could be settled within local judicial system if dispute arised within 5 years .
#)MORE FAVOURABLE COUNTRY (MFC) principal was ignored i.e rules in treaties differed from one to other.
#)Defination of word “investment” was narrowed to enterprise based from asset based
#)Retrospective taxation and revocation of licenses was common.
#)No space for Fair and equitable treatment
With this India cancelled 66 of its BITs unilaterally asking them for renegotiation. Model BITs is protecting type which gives no chance for renegotiation Thus leading to the decline of inflow to less than .2% of GDP by becoming 63rd in “World Banks Ease of doing Business “2020 and 190th in contract implementation .
All the above said reasons became an impediment in the path of investors as foreign investors want limited interference with their rights .Foreign Direct Investment (FDI) is necessary to boost up economy .BITs is the most acceptable form of it.
Reasons for rethinking about BITs:
#)Declining economy due to corona crisis
#)Increasing unemployment
As a part of Make in India 2.0 BITs need to be liberalized and liberation of FDI caps is another major step to be taken.
References:
- Hindu newspaper
- http//:www.tandefonline.com
- http//:www.unctad.org
-Soncy Varghese