MUMBAI: The government on Monday announced that the bilateral investment treaty (BIT) signed between India and UAE has come into force from August 31 this year. While the model BIT requires investors to seek resolution of disputes through the Indian legal system for at least five years before seeking international arbitration, the India-UAE BIT provides a period of exhaustion of local remedies, i.e. The period within which a person can seek international arbitration will be shortened. From five years to three years, investors will have faster access to Investor-State Dispute Settlement (ISDS). The treaty aims to provide peace of mind to investors in both countries, and will now include portfolio investments, a departure from previous treaties.
The BIT signed and implemented between India and the UAE provides investors from both countries with the ability to seek redress if they feel they are not getting a fair deal, as well as providing investors with a stable and predictable tax system. Minister Piyush Goyal said that it will increase confidence in the country. The Ministry of Commerce and Industry, Government of India told reporters after the 12th meeting of the India-UAE High Level Joint Investment Task Force.
However, according to think tank Global Trade Research Initiative (GTRI), shortening the exhaustion period for local remedies to three years would weaken India’s ability to resolve disputes domestically and increase the likelihood of them going to international arbitration. GTRI founder Ajay Srivastava said the move could lead to more frequent and costly arbitration proceedings, which could challenge India’s regulatory decisions on broader investment issues. said.
โThis represents a more flexible stance in protecting sovereign decision-making compared to the model BIT,โ Srivastava said.
The UAE ranks seventh, accounting for 3% of the total foreign direct investment (FDI) received in India, with cumulative investment of approximately $19 billion from April 2000 to June 2024.
India has also made 5% of its total foreign direct investment in the UAE amounting to USD 15.26 billion from April 2000 to August 2024.
The ministry said that since the Bilateral Investment Promotion and Protection Agreement (BIPPA) between India and the UAE, signed in December 2013, expired on September 12 this year, the implementation of this agreement with the UAE will Investors will be provided with continued investment protection, he said.
Other important features of the agreement include treating investments with an obligation not to deny justice, prohibiting fundamental violations of due process, prohibiting targeted discrimination, and prohibiting clearly abusive or arbitrary treatment. It contained provisions such as prohibitions.