Bilateral Investment Treaty Model to Minimise Cairn Energy Type Dispute: Commerce Minister
India’s Finance Minister Arun Jaitley (left) with Nirmala Sitharaman, Industry and Commerce Minister (Photographer: Graham Crouch/Bloomberg)

Bilateral Investment Treaty Model to Minimise Cairn Energy Type Dispute: Commerce Minister


The government has framed the model Bilateral Investment Treaty to minimise Cairn Energy-like disputes, the commerce ministry said on Monday. The Cairn Energy dispute has resulted in demand for compensation of $5.6 billion from India.

The government has received dispute notices from investors on the BITs signed on the basis of the old model text of 1993, Commerce and industry minister Nirmala Sitharaman said in a written reply to the Lok Sabha.

Cairn Energy Plc and Cairn UK Holdings Ltd. have initiated international arbitration under India-U.K. Bilateral Investment Protection and Promotion Agreement, wherein it has sought $5.6 billion in compensation from India, she said.

Arbitrators have been appointed and the proceedings have initiated, she added.

In order to minimise such investor related disputes in future, the government has recently revised its model BIT text which aims at providing investor protection within the overall framework of laws and policies regulating foreign investment in India keeping in mind the interests of the nation
Nirmala Sitharaman, Commerce Minister

The revised model BIT will form the basis of negotiation for future BITs, Sitharaman said, adding that in “the new model BIT, taxation matters have been excluded in view of the fact that taxation is an integral function of the state’s sovereignty and hence such matters need not be escalated under treaty dispute settlement mechanism”.

She also said there is no evidence to suggest that export promotions have been affected by such litigations.

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