The Hindu BusinessLine | 24 October 2023
India-UK FTA: Efforts on to also finalise dispute settlement in investment pact
BY AMITI SEN
India and the UK are progressing towards a common ground on dispute settlement, the most controversial part of the Bilateral Investment Treaty (BIT) being negotiated, in a bid to ensure that the investment pact gets simultaneously concluded with the Free Trade Agreement (FTA) in goods and services which is at an advanced stage of discussion, sources have said.
“Most of the issues in BIT have been settled. There are some areas left like Investor-State Dispute Settlement (ISDS) that need more work. But both sides have changed their stance during the current negotiations and become more flexible. The UK is attempting to be more accommodative in its demand for international arbitration and may allow local remedies to be tried first with certain caveats. The concern around the `exhaustion of local remedies’ clause in ISDS is related to the time it takes to settle disputes in India and needs to be addressed. You cannot make investors to wait for ten years,” a source close to the development said.
Although negotiators of the India-UK FTA have been trying their best to close some remaining gaps in areas related to market access for goods and services and rules of origin in time for the proposed India visit of British Prime Minister Rishi Sunak this month-end, things are still not quite final.
“There has been no official announcement yet of the British PM’s proposed visit to India although unofficially both sides have been talking about it. Moreover, all issues related to the India-UK FTA have not yet been ironed out though efforts are on continuously. So, it is wait and watch for all,” the official said.
The FTA, when implemented, is likely to help the two countries double bilateral trade to $100 billion by 2030.
In the area of investments, India had first proposed a pact based on the Model Bilateral Investment Treaty (BIT) drafted by the Finance Ministry. However, the UK showed less inclination towards this proposed pact as it allowed investors to go for international arbitration only after exhausting local remedies. The UK wanted that international arbitration should be allowed without going to local courts first.
“A middle-ground is likely to be arrived at on the issue of local remedies by meeting UK’s concern on the time taken to arrive at judgements on disputes locally,” the source said.
While there was a strong buzz about the India-UK FTA being concluded first independently of the BIT, all efforts are still being made to ensure that both are finalised simultaneously, the source added.