The Lift Line
“The question, therefore, is not simply whether India should offer investors more or less protection. It is about what India has learnt from the past decade and how those lessons should shape its new model.”
Why This Editorial Matters for Your Exam
Jyoti Singh, a Delhi-based advocate who has been a legal consultant to the Department of Economic Affairs, writes in The Hindu’s op-ed page of 3 October 2026 as the revised Model Bilateral Investment Treaty (BIT) is reported to be finalised and awaiting Cabinet approval. It complements the Indian Express column by Surjit S Bhalla of 2 October, which argued the old model cost India investment; this piece focuses on treaty design.
GS Paper 2: Bilateral agreements; important international institutions. GS Paper 3: Investment models; external sector.
Background and Context
| Year | Event |
|---|---|
| 2011 | White Industries Australia v India award: India held liable over delays in its courts |
| December 2015 | Revised Model BIT approved; most older BITs later terminated |
| 2024 | India-UAE BIT: three years of local remedies |
| 2024 | India-Uzbekistan BIT: state may bring counterclaims against investors |
| 2025-26 | Union Budget announces a revamped, more investor-friendly model |
| July 2026 | India-Israel Bilateral Investment Agreement enters into force: three years of local remedies |
The vocabulary.
| Term | Meaning |
|---|---|
| ISDS | Investor-state dispute settlement, usually arbitration |
| MFN | Most-favoured-nation: an investor can claim treatment given under other treaties |
| FET | Fair and equitable treatment |
| Exhaustion of local remedies | Investor must first use domestic courts for a set period |
| Counterclaim | A state’s claim against the investor within the same arbitration |
The Analysis
1. Practice has moved ahead of the model. The UAE and Israel treaties cut local remedies to three years; the model still says five.
2. MFN needs careful drafting. In Maffezini v Spain, an investor used an MFN clause to escape an 18-month local-court requirement by borrowing another treaty’s dispute terms. Plama v Bulgaria refused such importation without clear text. Recent treaties expressly exclude dispute settlement from MFN.
3. Obligations, not declarations. The Uzbekistan treaty’s counterclaim provision shows how to bind investors. Sustainable development should be written as legal obligations, not policy language.
4. Global reform. UNCTAD sees a shift to facilitation and narrower protections; UNCITRAL Working Group III is weighing a permanent tribunal, an appellate mechanism, rules on damages and dispute prevention.
5. A rule-shaper, not a rule-taker. Drawing on the scholarship of Makane Moïse Mbengue, the writer argues a developing state can shape investment law through its treaty practice.
Data and Institutions Vault
Prelims-grade facts:
India’s practice:
- Model BIT approved December 2015; requires five years of local remedies before arbitration.
- UAE (2024) and Israel (in force July 2026): three years of local remedies.
- India-Uzbekistan BIT: allows the host state to bring counterclaims.
Institutions and cases:
- UNCITRAL Working Group III: reform of investor-state dispute settlement.
- UNCTAD: UN Trade and Development, tracks investment treaties.
- Maffezini v Spain: MFN used to bypass an 18-month local-court rule; Plama v Bulgaria: importation refused.
⚠️ Watch the trap: UNCITRAL (UN Commission on International Trade Law) drafts rules and model laws; ICSID (World Bank) administers arbitrations. India is not a party to the ICSID Convention.
The Debate
For the writer’s view. A clearer, more workable model, with investor obligations in legal terms, serves India better than one tilted wholly towards investors or the state.
The other side. India’s treaty network collapsed after 2016; investors want familiar protections fast, and new obligations may slow negotiations.
The balanced verdict. Shorten local remedies, define MFN narrowly, keep the right to regulate explicit, and sign with major capital sources.
How to Think About This
A model is a starting point. Exam answers often treat a Model BIT as a fixed rulebook. It is the opening position in negotiations; what matters is the range it allows in actual treaties.
Diagram-in-Words
Takeaway Box
- Status: revised Model BIT reportedly finalised, awaiting Cabinet approval.
- Practice: 5 years local remedies in the 2015 model; 3 in UAE and Israel treaties; counterclaims in the Uzbekistan BIT.
- Design asks: scoped MFN, clear FET and expropriation, investor obligations, dispute prevention.
- Global: UNCTAD facilitation shift; UNCITRAL WG III reform.
Sources: The Hindu, UNCTAD Investment Policy Hub, UNCITRAL Working Group III
Source: India's Model BIT a Decade Later: MFN, ISDS, Counterclaims — Ujiyari.com | Free UPSC & State PCS Editorial Analysis
