Investor-state arbitration allows foreign investors to bring claims against host states under bilateral investment treaties (BITs) or investment chapters of trade agreements. India has been a respondent in several high-profile arbitrations, including the Cairn Energy and Vodafone BV cases, and has responded by terminating most of its existing BITs and adopting the Model Bilateral Investment Treaty 2016.
India signed over 80 BITs between 1994 and 2016, most based on the 1993 Model BIT that offered broad protections including fair and equitable treatment, most-favoured-nation treatment, national treatment, expropriation protections and ISDS through international arbitration. Following the White Industries v India award (2011) and the commencement of Cairn Energy and Vodafone BV arbitrations, India undertook a fundamental review of its BIT programme. The Model BIT 2016 significantly narrows investor protections: it replaces the fair-and-equitable-treatment standard with a closed list of obligations (customary international law minimum standard of treatment), requires exhaustion of local remedies for five years before invoking ISDS, carves out taxation measures, and defines expropriation narrowly.
AMLEGALS advises foreign investors on the availability and scope of treaty protections for their investments in India, advises on the structuring of investments through treaty-friendly jurisdictions, represents investors and states in ISDS proceedings under UNCITRAL and ICSID rules, and advises on the enforcement of investment-treaty awards.
Analysing the applicable BIT or investment chapter and assessing the availability of substantive protections for the investment.
Advising on the structuring of investments through jurisdictions with favourable BIT coverage.
Advising on the exhaustion of local remedies requirement under the Model BIT 2016 and cooling-off period compliance.
Representing investors or states in arbitration under UNCITRAL or ICSID rules.
Advising on the enforcement of ISDS awards, including the interface between the New York Convention and ICSID Convention.
Advising states and instrumentalities on defences to investor claims, including police powers, national security and public-purpose exceptions.
ISDS is a mechanism under bilateral investment treaties and investment chapters of trade agreements that allows a foreign investor to bring an arbitration claim directly against the host state for breach of the treaty's investment protection standards — such as expropriation, denial of fair and equitable treatment, discrimination or breach of an umbrella clause. The arbitration is typically conducted under UNCITRAL Rules, ICSID Convention or ICSID Additional Facility Rules.
India's Model Bilateral Investment Treaty 2016 replaced the 1993 Model BIT and significantly narrows investor protections. Key features include: replacement of FET with a closed list based on customary international law; a five-year exhaustion of local remedies requirement before invoking ISDS; exclusion of taxation measures from ISDS; narrow definition of expropriation; no MFN clause; and preservation of the host state's regulatory space for public-interest measures.
Cairn Energy PLC brought an arbitration against India under the India-UK BIT (1994) challenging the retrospective application of the 2012 amendment to the Income Tax Act (which taxed indirect transfers of Indian assets). The tribunal in December 2020 found India in breach of the BIT and awarded approximately USD 1.2 billion plus interest and costs. India subsequently enacted the Taxation Laws (Amendment) Act 2021, which withdrew the retrospective tax and refunded amounts collected.
Yes. India has terminated or allowed to lapse the majority of its older BITs (over 65 treaties) and is negotiating new treaties based on the Model BIT 2016. As of 2026, India has signed new BITs with select countries based on the 2016 Model. The sunset clauses in terminated treaties continue to protect existing investments for a further period (typically 10 to 15 years).
Yes, but only after exhausting local remedies for five years from the date on which the investor or investment first acquired knowledge of the breach. The Model BIT also requires a six-month cooling-off period for negotiation before commencing arbitration. These requirements substantially lengthen the timeline compared to the older BITs.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
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