Enforcing awards under bilateral investment treaties

Recent decisions and actions of Indian courts and governmental agencies have raised concerns among foreign investors in India. News reports suggest that certain foreign investors intend to step outside the recourse afforded by the executive, legislative or judicial organs of the Indian state, and may instead seek recourse to bilateral investment treaties (BITs) entered into by the government of India (GoI).

The GoI has entered into BITs with over 70 countries, providing for the promotion and protection of investments by investors of one country, made in the territory of the other. The dispute resolution provisions in certain BITs provide for an investor, being a national of one party to a BIT, to initiate arbitration against the government of the other country if that government fails to fulfil its obligations under the BIT. Such provisions may provide for arbitration in accordance with the rules of the International Centre for Settlement of Investment Disputes (ICSID), which was established under a convention that also provides for a mechanism for enforcement of ICSID awards.

India is not a signatory to the ICSID convention. BITs to which the GoI is a party and which contemplate arbitration as a dispute resolution mechanism provide for ad hoc arbitrations under the rules of an arbitration institution (BIT arbitrations). These arbitrations can be held in India, or, as is more likely, in a neutral venue in a third country.

Neha Goyal and Simran Dhir are associates at S&R Associates, a law firm based in New Delhi and Mumbai. They can be contacted at ngoyal@snrlaw.in and sdhir@snrlaw.in.