BITs should capture national interest, current model will be revamped: FM

Speaking at the inauguration of the first PG Certificate Course on International Commercial & Investment Treaty Arbitration in New Delhi, Sitharaman said issues related to BIT are unique

Finance Minister Nirmala Sitharaman on Saturday said that going forward the bilateral investment treaties should capture national interest in relation to regulatory powers and serve as a guide to arbitrators in resolving disputes.

Speaking at the inauguration of the first PG Certificate Course on International Commercial & Investment Treaty Arbitration in New Delhi, Sitharaman said issues related to Bilateral Investment Treaty (BIT) are unique to the sovereign and hence BIT should be negotiated stand-alone rather than as a part of FTA agreement.

Stating that arbitrators have often ignored the judicial decisions of the host country, Sitharaman said an investment treaty must not only provide better regulatory powers to the nations but must also serve as guidance to arbitrators to restore faith in arbitration.

"I strongly believe, moving forward, the framework of investment treaties should capture national interests in relation to regulatory powers and strengthen guidance for arbitrators in resolving disputes, keeping in mind nations' interests and circumstances as well," Sitharaman said.

Presently, India is negotiating this treaty with the UK, Saudi Arabia, Qatar, and the European Union (EU).

The government in Budget 2025-26 had announced revamping the current model BIT to make it more investor-friendly and attract foreign players.

"To encourage sustained foreign investment and in the spirit of 'first develop India', the current model BIT will be revamped and made more investor-friendly," the Budget had said.

The announcement assumes significance as only a few countries have accepted the existing model tax treaty, and most of the developed nations have expressed their reservations on the tax with regard to provisions like resolution of disputes.

Sitharaman said that BIT and its ramifications are very important for the sovereignty of the country, therefore it's important for us to have a stand-alone BIT with specialists who deal with taxation laws, as well as policy experts.

Quoting UNCTAD reports, Sitharaman said there have been 1,368 registered investment treaty cases.

On average, most of these cases - almost 70 per cent are pursued against developing nations based on the old-generation treaties and that's a worrying element for the developing countries. It allows the investors to maliciously seek unfair benefits from them, she said.

Some commercially deep-pocket parties buy the case from one of the arbitration parties and they run this for a long period, which no sovereign state can afford fighting in different jurisdictions. Then, at the end of the day, the case is won by the party with a deep pocket. It's not the same for all cases but there are anecdotal examples from many developing countries.

The average amount sought by investors in Investor-State Dispute Settlement (ISDS) cases is USD 1.1 billion, which remains a considerable burden for the Global South.

Corporations have used Investor-State Dispute Settlement mechanisms via investment treaties to challenge government policies, environmental regulations and public interest laws, Sitharaman said.