Srikrishna Committee- BIT Disputes Resolution

 

Relevancy

  • G.S. Paper 2,
  • What is BIT?
  • Key recommendations of the committee

Recently

  • 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.
  • They are based on a model BIT formulated by India in 2016.
  • Government of India has signed BITs with 83 countries.
  • The distinctive feature of model BIT is that they allow for an alternative dispute resolution mechanism called ‘Investor-state dispute settlement’.
  • The model BIT provides the framework for new negotiations with its trading partners.

Key recommendations of the Srikirishna Committee

  • It recommended the creation of the post of an ‘international law adviser’ (ILA) to advise the government on international legal disputes, particularly BIT disputes.
  • Justice B.N. Srikrishna committee was constituted to prepare a road map to make India a hub of international arbitration.
  • It also mentioned the possibility of establishing a BIT appellate mechanism and a multilateral investment court.
  • It called for the creationg of designated fund to fight 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 recommended hiring of external lawyers and appointing counsels having expertise in BITs to boost the government’s legal expertise.

Shortcomings

  • 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.
  • Framework
    • The call for appointing a ‘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.

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