• There is a growing concern in India and the world regarding decreasing Bilateral investment protection agreements (BIPAs).
• With the G20 presidency, India has an opportunity to bring clarity to pressing issues under the international investment regime to smoothen negotiating BIPAs.

Trade and Investment Working Group (TIWG) meeting

• The TIWG was established during the Chinese Presidency in 2016.
• In 2016, G20 also adopted a set of non-binding guiding principles for Global Investment Policymaking to serve as a reference for national and international investment policymaking.
• Aim: to coordinate efforts in strengthening trade and investment.
• The topics under consideration in India include the increasing trade gap, access to trade finance, resilient global value chains, integrating MSMEs in worldwide trade, and efficient logistics.
• It is characterized by bilateral investment protection agreements (BIPAs) between two countries and multilateral or regional trade agreements.

Bilateral investment protection agreements (BIPAs) or Bilateral Investment Treaty (BIT)

• It is a bilateral agreement in which two countries sit together and decide the conditions for private investments by citizens and firms of the two countries.
• The investment discussed under BIT is Foreign Direct Investment (FDI).
• The world’s first BIT was signed between Pakistan and Germany in the late 1950s.
• There are currently 2217 BIPAs in force, out of which 1,809 have been signed by G20 countries with other states, including non-G20 members.
• Hence, the discussions at the G20 could significantly impact shaping the international architecture to protect investments and provide certainty to investors.

Concerns regarding BIPAs

• There is an increasing trend of states terminating BIPAs.
• Example: a minimum of 393 terminations came into effect in 2021, while the number of BIPAs that were signed remained less than 30.

Investor-state dispute settlement (ISDS) cases

• Significant source of concern for states is the steady increase in the number of ISDS cases brought by investors against states in response to regulatory measures viewed inconsistently with the BIPAs.
• Such rising claims have led to a ‘regulatory chill’, where states find it challenging to achieve socially desirable goals as it may go against the provisions of the BIPAs.
• The independence and impartiality of ISDS mechanisms under BIPAs are also questioned, as it is up to the parties to the dispute to nominate an arbitrator of their choosing.

Primary Rules of international investment law

• The ambiguity of this law is another cause of worry for states.
• There is no consensus on the
• Definition of an investment,
• Standard of treatment which needs to be accorded to the investors remains ambiguous, and
• Investors have used the most favored nation clause for treaty benefits
• A process of importing favorable clauses from other treaties for the most advantageous protections.
• Due to these reasons, countries such as Bolivia, Ecuador, South Africa, and Venezuela have terminated their BIPAs.
• India has also joined these countries.

Global Concerns over BIPSs

• India is not alone in raising concerns over BIPAs.
• 23 members of the European Union have agreed to end all intra-EU BIPAs as they violated the EU’s fundamental principle of autonomy and are incompatible with EU law.

India’s Experience with BIPAs

• It began in the 1990s when it started entering into agreements with more than 80 countries to protect investments.
• India’s experience ended on a bitter note when an international tribunal held it responsible for failing to provide an effective means to assert the claims and enforce the rights of an investor under a BIPA in the White Industries Case.
• The government commenced a process of revisiting its existing BIPAs.
• As a result, India started adopting a revised Model BIPA (a draft version based on which states negotiate BIPAs).
• India terminated 77 BIPAs in 2017.
• However, the recent Parliamentary Committee on External Affairs reports have recommended that India take more proactive measures in negotiating BIPAs in identified priority areas.

India’s 2015 Model BIPA:

• Criticism of this is state-centric, placing an added burden on investors to exhaust local remedies before approaching an ISDS tribunal, and being ambiguous on some issues.
• Model BIPA is an attempt to maintain sovereignty over regulations for public interests while also protecting investors’ interests.
• The definition of key terminologies has been narrowed down to cover only those investors who have an actual presence in India.
• Some controversial provisions related to the treatment of investors have been removed from the Model BIPA, and the conditions of expropriation have been explained in detail.

India’s inward Foreign Direct Investment (FDI)

• G20 accounts for roughly 28% of India’s inward Foreign Direct Investment (FDI).
• Whereas the total amount of outward FDI from January 2022-February 2023 is $10.2 billion.

India has an opportunity at G20 to bring clarity to pressing issues under the international investment regime to smoothen negotiating BIPAs. It is thus time for investment agreements to take their place back on the high table.