Finance Minister Nirmala Sitharaman has emphasised the importance of bilateral investment treaties (BITs) in capturing national interests in respect to regulatory powers and serving as a roadmap for arbitrators in settling disputes to avoid wealthy investors from exploiting underdeveloped countries.
Sitharaman, speaking at the launch of the first PG Certificate Course on International Commercial and Investment Treaty Arbitration here, noted that arbitrators have frequently overlooked the host country’s legal decisions. Even findings connected to crimes such as fraud and corruption proven by the host country’s court of law put the nations in a difficult position to accept the award, she noted.
“An investment treaty must not only give governments better regulatory authorities, but it must also provide arbitrators with instructions in order to restore trust in arbitration. I strongly believe that, going forward, the structure of investment treaties should capture: – National interests in relation to regulatory powers – Strengthened advice for arbitrators in settling disputes while considering nations’ interests and circumstances,” the Finance Minister stated.
She underlined that difficulties of a Bilateral Investment Treaty (BIT) are unique to each sovereign, and hence BITs should be negotiated separately rather than as part of an FTA deal.
The Finance Minister’s announcement comes as India negotiates bilateral investment treaties (BITs) with the United Kingdom, Saudi Arabia, Qatar, and the European Union.
In Budget 2025-26, the government announced a redesign of the present model BIT to make it more investor-friendly and attract foreign businesses.
Sitharaman cited UNCTAD figures, claiming that 1,368 investment treaty cases had been lodged. On average, about 70% of these claims are brought against developing countries under old-generation treaties, which is a source of concern for them. It enables investors to fraudulently seek unjust benefits from them, she claims.
Some commercially wealthy parties purchase the case from one of the arbitration parties and pursue it for an extended period of time, which no sovereign state can afford to litigate in many jurisdictions. The party with the deepest pockets ultimately wins the case. It is not the same in all circumstances, but the Finance Minister cited anecdotal evidence from several developing countries.
The average sum requested by investors in Investor-State Dispute Settlement (ISDS) lawsuits is $1.1 billion, posing a significant burden on the Global South.
Sitharaman explained that corporations have used Investor-State Dispute Settlement procedures like as investment treaties to challenge government policies, environmental restrictions, and public interest laws.
She stated that the BIT and its repercussions are critical to the country’s sovereignty, hence we need a stand-alone BIT with taxation and policy expertise.
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