Finance Minister Nirmala Sitharaman on Saturday noted the need for a standard operating procedure (SOP) to handle international arbitration cases arising from Bilateral Investment Treaties. She pointed out that India currently lacks a structured mechanism to deal with such cases efficiently. The finance minister also flagged concerns about the traditional BITs, which were primarily focused on investor protection. She warned that such treaties have led to situations where arbitration rulings interfere with a country’s sovereign decisions. “So, nations are becoming weary of international arbitrations. Nations like Australia are moving away from the traditional arbitration model of investor-state dispute settlement (ISDS),” she said, as per a report by The Times of India. She also raised concerns over arbitration tribunals ignoring the judicial decisions of host countries, even in cases involving fraud or corruption by investors. She stressed that investment treaties should not just protect investors, but also strengthen the regulatory powers of nations to ensure fair arbitration outcomes. ‘Now, when deep consideration is made, an investment treaty must not only provide better regulatory powers to the nations, butalso serve to restore faith in arbitration,’ she said.
