BITs, FDI and positions

Should India join the ICSID convention? Abhisar Vidyarthi writing in the Kluwer Arbitration Blog thinks so. He argues that the model BIT that India has now and is basing its new age BITs on is sufficient to balance investor-State rights and joining the ICSID convention will be a boost to foreign investment.

The Indian economy benefits significantly from incoming investments. As ICSID provides a transparent, reliable, and predictable legal framework for investor/investment protection, its membership will naturally enhance investor confidence and promote incoming investments. Therefore, the membership of ICSID will significantly add to India’s vast and emerging market and relatively cheap labour as factors attracting foreign investors to India. Incidentally, the benefits of membership of ICSID will also be reaped by Indian investors abroad as it will allow them to avail of the enhanced protection and special features of ICSID. Lastly, as India emerges as a political and economic superpower, it would be well-advised to re-consider its stance with regard to the ICSID regime. If India is able to renegotiate its investment treaties in line with the Model BIT, it will dilute the factors usually cited as reasons for India to refrain from joining ICSID Convention, thereby making its membership a viable option.

The analysis on the Model BIT and its incorporation makes interesting reading. It indictae sthat State's rights have been taken care off from the interpretative bias of previous arbitral tribunals. However, this would only be corroborated by future decisions under the new generation treaties.

However, is the causal relation between BITs, and consequently joining the ICSID convention and FDI growth established empirically? Also, what implications emerge when a country transforms itself from a capital importing regime to an exporting one? Should its investment treaty policy stance change?