Investors eye litigation under bilateral treaties

In the wake of the recent decision in the White Industries case, the Indian government has received several notices threatening action under different bilateral investment treaties (BITs). Since January, four international companies have threatened to invoke their respective BITs against the Indian government for reneging on international obligations.

This is indicative of global investors losing confidence in the government’s ability or willingness to adhere to its commitments and discharge its treaty obligations.

Nature of BITs

BITs are agreements between two countries for the reciprocal facilitation, promotion and protection of investments in each other’s territory by companies based in either country. India has entered into 137 such BITs with countries across the globe. These treaties enable private companies to file cases against governments, thereby subjecting countries to the risk of litigation by corporations from the other country which is a signatory to the agreement.

Vivek Vashi is the mainstay of the litigation team at Bharucha & Partners where Kanika Sharma is an associate.