Why in news?
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.
