Bilateral Investment Treaties and the Indian Judiciary

Abstract

India has entered into Bilateral Investment Treaties (BITs) with eighty-six countries; of these BITs, seventy-three have already come into force. Despite this massive BIT program, BITs in India did not attract much attention until foreign investors used BITs to slap India with investment treaty arbitration (ITA) notices. These foreign investors, ranging from telecom companies to Hedge Funds and, have challenged a host of state measures like cancellation of licenses by courts to legislations imposing retrospective taxes. The use of BITs to challenge actions of Indian courts has raised concerns in India regarding BITs encroaching upon India’s judicial sovereignty. These ITA notices against actions of the Indian judiciary have triggered a debate in India as to whether ITA may be invoked against judicial actions (and omissions).

India’s top law officer believes that such notices are untenable. In this regard, this paper examines whether the investors can bring BIT claims against India for the actions of the Indian judiciary. The paper studies this by discussing the international law of attribution, India’s limited ITA experience where judicial action or inaction has triggered BIT claims against India, and the BIT jurisprudence on claims against states due to actions of the judiciary. The paper concludes by proposing how India could reduce the interface between BITs and Indian judiciary given its sensitivities regarding BIT claims due to the actions of courts.

Keywords: BITs, Indian Judiciary, Supreme Court, denial of justice, India