India-UAE New Bilateral Investment Treaty (BIT)

In a departure from its 2015 model Bilateral Investment Treaty (BIT), On 7th Oct 2024, the Indian government relaxed arbitration norms for UAE investors.

UAE investors will now have to exhaust domestic remedies for three years, rather than five, before resorting to international arbitration.

Key Points

New BIT Between India and UAE: The treaty, signed in February and effective from August 31, 2024, replaces the expired Bilateral Investment Promotion and Protection Agreement (BIPPA).
It aims to ensure investment protection while maintaining a balance between investor rights and state regulation.
Three-Year Domestic Remedies Requirement: Unlike the previous model BIT's five-year requirement, the India-UAE BIT allows investors to pursue international arbitration after only three years of attempting to resolve disputes in India’s legal system.
Broader Investment Scope: The India-UAE BIT includes portfolio investments like stocks and bonds, expanding its coverage beyond long-term investments, which were emphasized in the 2015 model BIT. This could expose India to more disputes over financial instruments.
Potential Impact on India's Sovereignty: Think tank GTRI warns that the reduced local remedies period weakens India’s ability to resolve disputes domestically, increasing the likelihood of costly arbitration cases challenging India's regulatory decisions.
UAE’s $2 Billion Investment in India's Food Processing Industry: On the economic front, UAE has committed to an initial investment of $2 billion to establish a food processing facility in India.