Using Trade Treaty Policy to Strengthen Arbitration, Pg6

Key Highlights:

• India has recently signed new Bilateral Investment Treaties (BITs) with the UAE, Israel, and Uzbekistan, and Free Trade Agreements (FTAs) with New Zealand, the UK, the European Free Trade Association, and Oman.
• These agreements aim to strengthen India's commercial arbitration framework, moving beyond just market access and foreign capital attraction.
• India's recent FTAs generally omit Investor-State Dispute Settlement (ISDS), while its BITs include ISDS but differentiate it from commercial arbitration.
• The government's policy in BITs discourages third-party funding in ISDS, a stance that needs clarification regarding commercial arbitration.

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Detailed Insights:

• The Arbitration and Conciliation Act, 1996, provides the statutory foundation for domestic and international commercial arbitration in India.
• Future FTAs could explicitly state that the absence of ISDS is justified by the availability of robust commercial arbitration remedies within India.
• BITs require foreign investors to exhaust local remedies before accessing ISDS, a requirement that could be clarified to include commercial arbitration in India.
• Distinguishing the prohibition of third-party funding in ISDS from commercial arbitration can help India develop a comprehensive domestic policy.
• A predictable and enforceable dispute resolution system is crucial for attracting foreign investment and enhancing India's economic advantage.
• India's evolving treaty practice seeks to balance investment protection with national interests, aiming to establish the country as a global arbitration hub.

Key Concepts Involved:

• Bilateral Investment Treaties (BITs): Agreements between two countries for the reciprocal promotion and protection of investments by investors from each country.
• Free Trade Agreements (FTAs): Pacts between two or more countries to reduce barriers to imports and exports among them.
• Investor-State Dispute Settlement (ISDS): A mechanism in international investment agreements allowing foreign investors to sue host states directly for alleged breaches of treaty obligations.
• Commercial Arbitration: A private process where parties agree to resolve disputes outside of court, typically through a neutral third-party arbitrator.