Bilateral Investment Treaty Adjustments

• The India-UAE bilateral investment treaty (BIT) replaced the 2014 India-UAE treaty.

• BIT aims to balance investment protection and the state’s sovereign right to regulate.

• Provisions to reduce the discretion of investor-state dispute settlement tribunals.

• Requires foreign investors to exhaust local remedies for at least three years before bringing an ISDS claim.

• Definition of investment includes key economic characteristics like capital commitment, profit expectation, and risk assumption.

• Elimination of the criterion that the investment should be significant for the host state’s development reduces arbitral discretion.

• Article 4 of the BIT lists when state action will amount to a treaty violation.

• BIT maintains continuity of India’s investment treaty practice.

• It disallows third-party funding and ISDS unavailability if allegations of fraud or corruption are made against the investor.