A group of public interest organisations in the country have expressed concern about the ongoing US-India Bilateral Investment Treaty (BIT).

In a letter to Prime Minister Dr Manmohan Singh, the public interest organisations demanded that the one sided foreign investor protection regime  existing in the Bilateral Investment Treaties (BITs)/Bilateral Investment Promotion and Protection Agreement (BIPA) and in some recent Free Trade Agreements (FTA)/Comprehensive Economic Cooperation Agreement (CECA) should not be replicated in the US-India BIT.

Raising concerns about the ongoing discussions on the India -US BIT, the public interest groups asked the government to be open, transparent and inclusive with the Indian Parliament and other stakeholders when it comes to ongoing investor-state disputes, negotiations and other policies related to investment agreements as they have potentially serious consequences for the country.

“Our concerns are based on how the already existing BITs/CECA and their enforcement through Investor-State-dispute mechanism already undermine the domestic policy space and the justice system in our country. The investor-state dispute clause in such agreements clearly grants foreign companies the right to initiate dispute settlement proceedings against the government in secret arbitration forums outside the Indian judicial system,” the NGOs said.

Stressing the need to review the existing BITs, the NGOs reminded the government that the government actions, domestic regulations and court decisions in India are increasingly being challenged by multinational companies, with investor-to-state dispute mechanism being invoked under various BITs. The increasing use of this mechanism to skirt domestic judicial systems and the interpretation of such investor protection provisions beyond domestic law is undermining the Indian constitution and the rule of law. In particular, the threat of such arbitration claims by investors for billions of dollars being filed against India can in the long run have a ‘chilling effect’ on the ability of the different ministries to regulate different social and economic sectors.

In light of these concerns, we draw your attention to the unenviable but urgent task of re-examining the existing BITs signed in the 90s with the objective of available options for India to re-assert the domestic policy space, they said.

“We have been reading in news reports that India is seriously considering the step of excluding investor to state dispute clauses from investment agreements currently under negotiation with the EU and other countries. While this is a welcome step which could limit some future liability against claims being filed against India, this policy needs to be consistent, in particular to the BIT mooted by the US administration and its diplomats. We therefore request a moratorium on the ongoing negotiations of the US-India BIT; particularly as US corporations are notorious for filing claims against governments and using to their advantage the structural problems inherent in the arbitration regime. For example in the area of health and environment, several US corporations have used the North American Free Trade Agreement (NAFTA), Chapter 11 for suing governments for banning lawn pesticides (Dow Chemicals vs. Canada), and increasing the size of tobacco warnings on cigarette packets (Phillip Morris vs. Uruguay), the NGOs in their letter to the PM said.