India’s Investment Treaty Disputes: Analysis of Bit and Sunset Clauses

20th September, 2024 - 5:57 am Categories: Business 0 Comments

India has become a preferred import for foreign direct investment over the years and has also become less prone to FDI opposition. The-exchange regime that was initiated in 1991 opened up several avenues for foreign investment and increased foreign capital inflow. The introduction of Foreign Direct Investment changed the strict policies of investment into more acceptable ones, a liberal approach. Through this, India has gone to the international scene and concluded bilateral investment treaties. The vast number of these treaties also gave rise to various conflicts which only served to highlight the challenging nature of diplomatic law.

These disputes based on the investment treaties entered into Canada’s law must derive particularly from state parties and other uncontrolled symptoms of external satellite economic colonialism have not come into effect. The majority of the country’s investment treaties, also known as bilateral investment treaties, bilateral investment agreements (BITs), or investment treaties, have been designed to attract foreign capital. India has encountered quite a number of challenges concerning international investment treaty disputes as the part of bookcases brings forth costs of resources and money. India has faced many international investment disputes by tenets of international law with countries having diverse legal orientations which have made if favorable and risky for investors. Bilateral Investment Treaty (BIT) rightfully places burden on the responsibility of the host country as they must guarantee the protection of her. Even though most Americans express political values to protect free markets and discourage government interference in the economy, countless investors still regard the full resolution of ISDS in openly welcome intractability to them.

Sunset clauses, sometimes referred to as survival clauses, are the treaty provisions in Bilateral Investment Treaties (BITs) that guarantee a specific period of the stabilization after the treaty has come to an end. These clauses enable foreign investors to retain the option of filing claims against a host state (say in this case, India) and vice versa, even when there is no longer an active treaty. With respect to India’s position, irrespective of the cessation of some of the more seasoned BITs, those having sunset provisions would still permit foreigners to litigate against India and Indian investors to advance claims against other countries under lost treaties.

Overview of India’s BIT Terminations and Sunset Clauses

India commenced reconsideration and consequently repudiating and revoking substantive parts of its older BITs round about the year 2015. This overview report was based on the massive increase in the number of investor-state dispute settlements (ISDS) which had witnessed many cases against India which took huge amounts of money and deprived off the threats aimed at national assets. Nevertheless, a majority of these BITs had ‘sunset provisions’ which ranged from 10 to 15 years such that it was possible for investors who had made the investment before termination of the treaty to appeal for treaty protection for a specified duration and proceed for arbitration.

Claims Being Made By Foreign Investors Against India Under The Sunset Clauses

Indeed, while foreign investors have made use of these legal provisions allowing for sunset clauses in claims against India, such provisions are also available to Indian investors as well. Indian companies undertaking investments outside India may make use of the sunset clauses found in the BITs which have been terminated as a means of mitigation against the risks of the other contracting states. Even though no such press releases or reports may elaborate on such instances concerning the Indian investors and the sunset provisions, in fact, an investor from India who invested in any of such country which India ceased to treat with those agreed period could still cite treaty based clauses for investments within the sunset period. The sunset clause enabled the Indian company to sue India under the now-cancelled BIT in case the company was subjected to expropriation or unfair treatment abroad.

These sunset clauses are yet of course the national bottom lines clause which the investor continues to apply in the international disputes resolution processes even after the BIT in question has been stood cancelled in the end. Even with treaties that have effectively ended, thanks to their treaty making liabilities and an adverse operational environment, demands certainly exist for foreign investors to put up lawsuits in India, and for Indian investors to put up complaints in foreign countries. This current open ended Liability has forced India to change its stand in the investment treaties where it is trying to protect the rights of the investors while reserving the right to make policy and control national resources.

Author: Pillai Syamily, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.