TY - JOUR AU - Pramod, Sanjna AB - I. Introduction India is one of the fastest growing economies in the world,2 and one of the most attractive destinations for foreign direct investment (FDI). While globally FDI collapsed falling by 42 per cent in 2020, in contrast, India saw FDI rising by 13 per cent in the same year to the tune of US$57 billion as investment in the digital economy continued, particularly through acquisitions.3 Cross-border M&A sales grew by 83 per cent to US$27 billion—with infrastructure and energy deals also propping up M&A values in India.4 This is emblematic of India’s deep economic integration with the world economy and also reflects the significant presence of foreign investors in the country. From 1994 to date, India has signed more than 80 investment treaties with countries ranging from developed economies such as UK, Germany, France, Australia to key emerging markets like China and Russia.5 India is among the top-10 investment importing countries,6 top-20 investment exporting countries7 and top-15 countries with respect to investor-State arbitrations.8 The country has been involved in nearly 25 investment arbitrations as a respondent State, from which approximately nine arbitration notices stemmed from disputes regarding the Dabhol power plant project in Maharashtra in 2004 (which were eventually settled).9 The other disputes concerned judicial delays,10 maritime transport,11 multiple disputes in the telecom services sector12 and retrospective tax measures.13 India and Bilateral Investment Treaties: Refusal, Acceptance, Backlash written by Dr Prabhash Ranjan brings a long overdue closure to a crucial gap in literature by thoroughly analysing the world’s most populous democracy’s international investment policy and practice. As Professor Schill rightly notes in his foreword, despite the importance India has assumed for the future of international investment law, so far, no comprehensive analysis of India’s engagement with international investment law and investment treaties has been presented.14 Driven by India’s significant economic growth, high foreign investment inflows, vulnerability of BIT claims from foreign investors, consequent adoption of the new Model BIT and termination of several BITs, Ranjan, to the privileged benefit of a global audience, provides a meticulous documentation of India’s approach towards BITs and related developments. Ranjan effortlessly fulfills this objective by undertaking a critical examination of India’s objective towards BITs through the lens of India’s socio-economic policy, which sets it apart from existing albeit limited literature which only provide a descriptive account of the Indian treaty programme. Ranjan also takes on third world approaches to international law (TWAIL) and criticizes it for having stirred India’s international investment policy in a direction that is against his vision for India to be a global rule maker and standard setter in the field of international investment law. II. Overview The introduction to the book traces the evolution of the rules on protection of foreign investment and discusses the framework of bilateral investment treaties (BITs). Ranjan converses through the global debate on BITs and investor-State dispute settlement (ISDS) provisions, delving into four primary facets of the debate, including the relationship between BITs and the host State’s regulatory power; national contestation against BITs and ISDS as evidenced by State practice; the critique of BITs stemming from the critique of globalization and alleged colonial character of international law, and defence of BITs and ISDS. Dealing with these facets serves as a relevant context to India’s approach to BITs. For instance, the discussion on TWAIL, which generally views international investment law as a contemporary form of neocolonialism, is particularly important to truly understand the nuanced apprehensions that lead to protectionist international investment treaties.15 In the ever-changing reality of the global economy, Ranjan calls for a change in underlying perceptions as he appropriately notes that the TWAIL critiques are neither based on the actual working of BITs, ISDS or case law nor on current realities—for instance it would be erroneous for the USA to view BITs through the lens of a capital exporting country (given that the USA is also a major capital importer), and for India to view the investment regime purely from a capital importing country perspective, given that India is also a huge exporter of capital. Ranjan helpfully deals with India’s approach to BITs by tackling three distinct phases. Ranjan categorizes phase I from 1947 (when India gained political independence from British rule) to 1990, and labels this as India’s phase of ‘refusal’. Ranjan describes this period as economic nationalism where the aim was that India’s economic policy should serve its political policy of self-reliance and sovereignty.16 In phase II from 1991 to 2010, Ranjan discusses the economic reforms of 1991 and India’s embrace and ‘acceptance’ of FDI. India’s ‘backlash’ to investment treaties was triggered in phase III from 2011 to present. Ranjan notes that the White Industries award and the rising ISDS claims altered India’s approach to BITs compelled the government to rethink and triggering a backlash against BITs and ISDS.17 In Chapter 2, Ranjan examines India’s phase of economic nationalism and ‘refusal’ to sign BITs by subdividing it into two time periods—1947 to 1965 followed by 1965 to 1990, charting India’s first Prime Minister Jawaharlal Nehru’s Soviet Union–inspired economic vision in the first period18 and Indira Gandhi’s protectionism and left-wing populism in the second period.19 The chapter also discusses India’s approach towards international investment law after political independence and on multilateral and bilateral levels. Ranjan deals with India’s reservations against signing the ICSID Convention on the basis that it granted foreign investors additional rights of an unspecified scope without imposing any countervailing obligations on them. The discussion sheds light on the former Indian policy of self-reliance and sovereignty, which is particularly crucial for practitioners with India-related ISDS work or academics to understand fully the evolution of the treaty practice and India’s consequent ‘backlash’ against BITs today. Chapters 3 to 5 consider India’s phase of embrace and ‘acceptance’ of BITs, which was marked by the adoption of a liberal foreign investment policy in 1991, bold measures introducing automatic approval of FDI up to 51 per cent in high-priority industries; 100 per cent foreign equity in the energy sector and opening new sectors such as mining and telecommunications for foreign investment.20 Ranjan also maps out India’s 1993 Model BIT, the signing of the multilateral investment guarantee assurance, the first BIT with the UK in 1994, the ‘BIT-signing spree’ that followed and the minimal involvement in ISDS.21 The ‘acceptance’ phase of the book aptly assesses the structural reforms that signalled a paradigm shift in India’s foreign policy in contrast to the former protectionist outlook. Chapters 4 and 5 methodically explore jurisdictional, substantive and procedural provisions such as definitions of investment, most favoured nation (MFN), fair and equitable treatment (FET), monetary transfer provisions, expropriation, general exception provisions and ISDS in India’s BITs and free trade agreements (FTAs) and related case law. Ranjan helpfully reviews the legal import of various definitions across several treaties between India and Mauritius, Poland, Australia, Mexico, Turkey, Korea, Japan, Slovenia and ASEAN,22 and arbitral decisions in White Industries, Devas v India23 and Deutsche Telekom v India,24 among others. Through this expansive coverage, Ranjan presents notable patterns in this phase of India’s treaty practice—for instance, the broad expropriation and ISDS provisions and the narrow scope for general exceptions. To the contrary, India’s FTA investment chapters represent a better balance of investment protection with the host State’s right to regulate.25 Chapters 6 to 8 detail the investment claims brought against India sparking off the phase of ‘backlash’ and a review of Indian BITs. Chapter 6 outlines the advent of Narendra Modi’s ‘Make in India’ initiative to make India a manufacturing hub by attracting foreign investment and the government further liberalizing FDI norms. For India, 2011 was the watershed year with the first publicly known BIT arbitral award in the case of White Industries, which essentially triggered several treaty notices against India.26 Considering the surge in treaty claims, Ranjan succeeds in making out a convincing case that the claims have in fact arisen against India either due to the slow pace of the Indian judiciary, or Indian executive acting in bad faith (such as cancellation of spectrum licences without following due process), or the retrospective amendments to income tax laws or failure of State governments to fulfil assurances provided to attract foreign investment.27 This is contrary to the opponents of ISDS who assert that the system generally encroaches upon India’s sovereign right to regulate. In sum, while there are certain instances of foreign investors abusing ISDS, most of these claims were the outcome of central or State regulation that prima facie appeared abusive and arbitrary. This discussion is further developed in Chapter 7. It is thought-provoking and sheds light on the ISDS claims that compelled the Indian government’s backlash against BITs and consequently altered India’s treaty practice. The chapter elucidates reactions of various stakeholders such as the parliament, the government, civil society.28 Ranjan also discusses India’s review of BITs, outcome of such review, adoption of the 2016 Model BIT, termination of BIT, issuing joint interpretations and efforts to internalize BITs. Chapter 8 critically analyses the 2019 Indian Model BIT—the narrow definitions of investment, FET-type provisions, exclusion of MFN and taxation measures and the expropriation provision blurring the line between lawful and unlawful expropriation. In the concluding remarks in Chapter 9, Ranjan reiterates that India is not just an importer but also an exporter of capital and alerts readers that, where investment policy is tilted in favour of the host State’s regulatory power, it would reduce protection for Indian companies abroad. The significance of BITs for Indian companies investing abroad are evidenced by various examples discussed by Ranjan: an Indian investor successfully suing Poland under the Poland–India BIT,29 an Indian mining company suing Indonesia under the India–Indonesia BIT,30 and an Indian investor suing Macedonia under the India–Macedonia BIT for the alleged expropriation of mining concessions.31 Finally, Ranjan persuasively proposes an investment treaty practice that is influenced by the combined normativity of embedded liberalism and the formal version of international rule of law. Ranjan explains that with embedded liberalism BITs may impose limits on the host State’s exercise of public power for the protection of foreign investment, however the host State may deviate from their investment protection obligations for compelling public policy reasons such as protection of public health and environment.32 Ranjan however deems it imperative that the working of the tribunals should be fair and transparent to convince States that the system does not suffer from any systemic bias in favour of foreign investors.33 Instead of adopting an inward-looking and a protectionist or a defensive attitude to BITs, Ranjan proposes that the Indian BIT practice needs to protect and promote foreign investment without compromising India’s right to regulate.34 III. India And Bilateral Investment Treaties: A Must-Read Given India’s ever-expanding footprint in the global economy, inevitably, the country will play a key role in shaping international investment law and emerge as a force to be reckoned with. India and Bilateral Investment Treaties is a seminal work in the field which should find a place in the libraries of practitioners and academics. The quality of discussions is elevated not only by Ranjan’s refreshing critical analysis but also the detailed analysis of legal, political and economic issues concerning India’s approach to ISDS. As Professor Schill remarks in his foreword to the book, Ranjan remains firm in his vision for India to be a global rule maker and standard setter in the field of international investment law.35 Ranjan effortlessly provides detailed analysis and contextualization in this pioneering work which makes it an easy and insightful read. As an avid observer of the theory and practice of international investment law, with a focus on India’s increasing role, I commend it to every practitioner, academic and student interested in the field. Footnotes 1 Foreign Legal Associate, DLA Piper, Sydney; Norton Rose Fulbright, Sydney from January 2022. Email: sanjna.pramod@mids.ch. 2 According to the International Monetary Fund (IMF), India’s projected growth for 2021 is 9.5 per cent and 2022 is 8.5 per cent. See IMF, ‘Recovery During a Pandemic—Health Concerns, Supply Disruptions and Price Pressures’ World Economic Outlook Update accessed 24 October 2021. 3 UNCTAD, Global Investment Trend Monitor, No 38, 24 January 2021 accessed 24 October 2021. 4 ibid. 5 UNCTAD, ‘International Investment Agreements Navigator: India’ accessed 24 October 2021. 6 UNCTAD, World Investment Report 2021, ch 1, ‘Global Trends and Prospects’ accessed 19 November 2021. 7 ibid. 8 UNCTAD, ‘Investor-State Dispute Settlement Cases: Facts and Figures 2020ʹ accessed 19 November 2021. 9 Prabhash Ranjan, India and Bilateral Investment Treaties: Refusal, Acceptance, Backlash (OUP 2019) 130. 10 White Industries Australia Limited v the Republic of India, UNCITRAL, Final Award (30 November 2011). 11 Louis Dreyfus Armateurs SAS v the Republic of India, PCA Case No 2014-26, Award (11 September 2018). 12 Ranjan (n 9) 232–42. 13 ibid 242–57. 14 ibid xxxiii. 15 ibid 26–32. 16 ibid 47. 17 ibid 221. 18 ibid 48. 19 ibid 64. 20 ibid 104. 21 ibid 120, 121. 22 ibid 142–71. 23 CC/Devas (Mauritius) Ltd, Devas Employees Mauritius Private Limited and Telecom Devas Mauritius Limited v India, PCA Case No 2013-09. 24 Deutsche Telekom v India, PCA Case No 2014-10. 25 Ranjan (n 9) 214 26 ibid 221. 27 ibid 353, 354. 28 ibid 267–76. 29 Flemingo Duty Free Shop Private Limited v the Republic of Poland, UNCITRAL, Award (12 August 2016). 30 Indian Metals & Ferro Alloys Limited v the Government of the Republic of Indonesia, PCA Case No 2015-40. 31 Mr Gokul Das Binani and Mrs Madhu Binani v Republic of Macedonia, PCA Case No 2018-38. 32 Ranjan (n 9) 360. 33 ibid. 34 ibid 361. 35 ibid xxiv. © The Author(s) 2022. Published by Oxford University Press on behalf of ICSID. All rights reserved. For permissions, please e-mail: journals.permissions@oup.com This article is published and distributed under the terms of the Oxford University Press, Standard Journals Publication Model (https://academic.oup.com/journals/pages/open_access/funder_policies/chorus/standard_publication_model) TI - India and Bilateral Investment Treaties: Refusal, Acceptance, Backlash JF - ICSID Review:Foreign Investment Law Journal DO - 10.1093/icsidreview/siab051 DA - 2022-03-18 UR - https://www.deepdyve.com/lp/oxford-university-press/india-and-bilateral-investment-treaties-refusal-acceptance-backlash-gBiK2kmByy SP - 723 EP - 727 VL - 37 IS - 3 DP - DeepDyve ER -