Mar 3, 2016
Peter Mazereeuw reports in Embassy that while Canada and India are currently negotiating an investment agreement, the two countries may have a few challenging issues to sort out if the South Asian nation sticks to its new Model BIT as it was released in January.
The Model BIT is India’s new template for negotiations on bilateral investment treaties but it is different from most other investment deals Canada has signed in recent years.
There are three major ways that the Model BIT differs from past treaties:
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Pre-establishment activity is specifically excluded from the terms of the deal.
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Decisions or rules at the municipal level are excluded.
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Investors who feel they have been treated unfairly must pursue their claims in domestic courts for five years before they may bring their claims before an investor-state arbitration tribunal.
Riyaz Dattu, a partner in Osler’s Corporate Practice Group, says excluding decisions or rules at the municipal level could be “problematic” if companies encounter discrimination by municipal government or other local-level bodies. He added that Canadian deals often do extend to all levels of government.
As for the five-year minimum, Riyaz said Canadian negotiators don’t usually agree to such terms, known as “exhaustion of local remedies” clauses.
“I see that as being a big negotiating issue between Canada and India, particularly because we know in India the legal system doesn’t function very well,” he said.
If you subscribe to Embassy online, you can learn more about the problematic issues for Canada with India’s Model BIT by reading Peter Mazereeuw’s article, “Indian model could be trouble for Canada” February 24, 2016.