
The Srikrishna committee’s report was recently released, with a focus on recalibration of the Indian BIT regime.
What is a BIT?
It is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state.Government of India has signed BITs with 83 countries.They are based on a model BIT formulated by India in 2016.The model BIT provides the framework for new negotiations with its trading partners.The distinctive feature of model BIT is that they allow for an alternative dispute resolution mechanism called ‘Investor-state dispute settlement’.
What were the key recommendations of the Srikirishna Committee?
Justice B.N. Srikrishna committee was constituted to prepare a road map to make India a hub of international arbitration.It recommended the creation of the post of an ‘international law adviser’ (ILA) to advise the government on international legal disputes, particularly BIT disputes.Creation of an inter-ministerial committee (IMC), with officials from the Ministries of Finance, External Affairs and Law for better managing BIT disputes was also called for. It also mentioned the possibility of establishing a BIT appellate mechanism and a multilateral investment court.It recommended hiring of external lawyers and appointing counsels having expertise in BITs to boost the government’s legal expertise.It called for the creationg of designated fund to fight BIT disputes.
What are the shortcomings?
Framework – The call for appointing an ‘Law Adviser’ will amount to duplicating the existing arrangement.Presently, the Legal and Treaties (L&T) division of the External Affairs Ministry is mandated to offer legal advice to the government on all international law.It would be sensible to have the a member from the Commerce Ministry in the proposed IMC as it works for invester protection but it was not recommended.Narrow window – The report named the investor-state dispute settlement (ISDS) mechanism as robust.But it provides for only a narrow 90 day window for filing of BIT arbitration.The report is also silent on many other jurisdictional limitations given in Article 13 in the ‘Indian model BIT’ that also limit the usefulness of ISDS.Critical issues such as appointment of arbitrators, transparency provisions, enforcement of awards, standard of review were also overlooked.The commission’s mandate was to focus on on all the three parts of BIT arbitration namely –BIT arbitration has three aspects namely:Jurisdictional (such as definition of investment)Substantive (such as provision on expropriation)Procedural (ISDS mechanism).But it focussed only on the procedural aspect.