INDIA-UNITED ARAB EMIRATES BILATERAL INVESTMENT TREATY (2024)

Topic: INDIA-UNITED ARAB EMIRATES BILATERAL INVESTMENT TREATY (2024): TOWARDS STRONGER ECONOMIC TIES

I. INTRODUCTION

India and the United Arab Emirates (“UAE”) have always shared cordial relations over the last five decades. The relation between the two nations has been further solidified by a significant growth in trade and commerce. Trade relations between the two states, which was estimated to be about US$ 180M during the 1970s, has significantly grown to US$ 85 billion in the financial year 2022-23 ¹. In the last decade, the countries have further strengthened their economic ties by entering into the India-United Arab Emirates BIT 2013 ² (“2013 BIT”) and the Comprehensive Economic Partnership Agreement ³. It is noteworthy that although India had terminated around 77 BITs since 2016 in order to negotiate a new treaty under its New Model Treaty 2016, India chose to not terminate its 2013 BIT with the UAE ⁴.

During the visit of the Indian Prime Minister to the UAE on 13-14 February 2024, the leaders of the two nations published a joint statement declaring the signing of a new India-UAE BIT 2024 (“2024 BIT”) along with several other significant agreements such as Memorandum of Understanding for cooperation on Digital Infrastructure Projects, Agreement on interlinking of instant payment platforms – UPI (India) and AANE (UAE) and Agreement on interlinking debit/credit cards – RuPay (India) with JAYWAN (UAE) ⁵.

Pursuant to the expiration of the 2013 BIT on 12 September 2024 ⁶, the Indian government announced on 7 October 2024 that the 2024 BIT ⁷ would be given effect from 31 August 2024 thereby giving “continuity of investment protection to investors of both the countries.”⁸ The Indian government, while publishing the text of the 2024 BIT, also expressed that:

“The signing and enforcement of the BIT reflects both nations’ shared commitment towards enhancing economic cooperation and creating a more robust and resilient investment environment. The Treaty is expected to pave the way for increased bilateral investments, benefiting businesses and economies in both countries.” ⁹

In view of the same, it is necessary to briefly highlight the key features of the 2024 BIT and the extent of its deviation of the Model BIT 2016. This article also examines the next steps that the two nations have agreed upon to further deepen its economic ties.

II. KEY FEATURES OF THE 2024 BIT

The 2024 BIT contains provisions for not only protecting the investments by foreign investors but also ensures the right of the host state to regulate thereby ensuring an equilibrium. The following key provisions have been mutually agreed upon by the two nations:

1. a) A closed asset-based definition of Investment, which includes protection of portfolio investment ¹⁰. The definition of the ‘Investment’, which now includes Portfolio Investments, was expressly excluded from the 2016 Model BIT ¹¹.


2. b) The provision for treatment of investments includes denial of justice, fundamental breach of due process, targeted discrimination and manifestly abusive or arbitrary treatment ¹².


3. c) The provision for full protection and security has been limited to physical security of investors and to investments and nothing beyond the what is required by customary international law regarding Minimum Standards of Treatment ¹³.


4. d) National Treatment ¹⁴.


5. e) Carve outs for measures like taxation, local, government, government procurement, subsidies or grants and compulsory license ¹⁵.


6. f) The ISDS mechanism, which mandated an exhaustion of local remedies for 5 years before the national courts under the 2016 Model BIT, has been reduced to 3 years ¹⁶.


7. g) Right of the State to Regulate ¹⁷.


8. h) No claim can be made in case the investment is associated with corruption or fraud or round tripping etc ¹⁸.


9. e) Provisions for Expropriation ¹⁹, Transparency ²⁰, Transfers ²¹ and Compensation for losses²².


10. j)Dismissal of frivolous claims ²³.


11. k) Prevention of Conflict of Interest of Arbitrators and Challenges ²⁴.


12. l) Third Party Funding of the Investor has been disallowed ²⁵.

III. MOVING FORWARD

With a well-balanced investment treaty in place together with previous agreements, it is clear that the two nations are gearing up to increase its economic relations. It is reported that UAE has made a commitment of an initial investment of US$ 2 billion to set up a food facility in India to procure high-quality products ²⁵. Pursuant to the 12th Meeting of India-UAE High-Level Joint Task Force on Investments ²⁷, the Indian Commerce and Industry Minister Piyush Goyal indicated that:

“Approximately $ 2 billion is the initial commitment that the UAE has made to invest in the food processing industry and the food park logistics required to move the material to the UAE.” ²⁸

The Minister has further indicated that:

“This matter (setting up of a food processing facility by the UAE) has been under discussion for quite some time with different arms of the UAE government and different states in India. Now, we are looking at progressing faster to ensure investments in food processing can materialize in India, with UAE investors and the UAE market, along with other Gulf markets, being ready export destinations for Indian products.” ²⁹

The Press Information Bureau (“PIB”) has published that the development of this food park will take place in Ahmedabad, Gujarat. The PIB reported that:

“Food parks are among areas for greater collaboration and investments between India and UAE. It will lead to higher income for farmers, jobs’ creation in food processing sector, and enhance food security for UAE. Small working groups between Central Government, State Governments and UAE Government will take forward food corridors between the two countries on a mission-mode basis. The strong progress made on these initiatives attests to the high level of commitment from both sides to ensure the implementation of their respective leaders’ visions.”

Considering the deep and growing economic ties between the two states, the possibility of achieving a bilateral trade of US$ 100 billion may well be achieved before the target year of 2030 ³⁰.

¹ India-UAE Bilateral Relations, (last visited 9 October 2024).

² The Agreement between the Government of the Republic of India and the Government of the United Arab Emirates on the Promotion and Protection of Investments, (last visited 9 October 2024).

³ Comprehensive Economic Partnership Agreement between the Government of the Republic of India and the Government of the United Arab Emirates (UAE) executed on 18 February 2022, (last visited 8 October 2024).

⁴ Dharmil Doshi, Chasing New Horizons: Sunset clauses in India’s revamped BIT regime, Observer Research Foundation (28 Mar. 2024), (last visited 9 October 2024).

⁵ Joint Statement: Visit of Prime Minister to the United Arab Emirates (February 13-14, 2024), Ministry of External Affairs Government of India, 14 February 2024, (last visited 9 October 2024).

⁶ UNCTAD, International Investment Agreements Navigator, India, (last visited 9 October 2024).

⁷ India-United Arab Emirates BIT (2024) entered into force 31 August 2024, (last visited 9 October 2024) [hereinafter 2024 BIT].

⁸ Press Information Bureau Delhi, Bilateral Investment Treaty between India and United Arab Emirates, giving continuity of investment protection to investors of both the countries, comes into effect, Ministry of Finance (7 Oct. 2024), (last visited 9 October 2024).

⁹ Id.

¹⁰ 2024 BIT, Art. 1.4.

¹¹ Art. 1.4 of The Model Text for the Indian Bilateral Investment Treaty (2016), (last visited 9 October 2024).

¹² Supra note 10, Art. 4.1.

¹³ Id., Art. 4.2.

¹⁴ Id., Art. 5.

¹⁵ Id., Art. 2.4.

¹⁶ Id., Art. 17.1.

¹⁷ Id., Art. 3.

¹⁸ Id., Art. 14.4.

¹⁹ Id., Art. 6.

²⁰ Id., Art. 11.

²¹ Id., Art. 7.

²² Id., Art. 8.

²³ Id., Art. 23.

²⁴ Id., Art. 21.

²⁵ Id., Art. 16.

²⁶ Ravi Dutta Mishra and Hitesh Vyas, India eases investor dispute arbitration norms for UAE under new investment treaty, The Indian Express (8 Oct. 2024), (last visited 9 October 2024).

²⁷ Press Information Bureau Mumbai, 12th Meeting of the India-UAE High Level Joint Task Force on Investments, Ministry of Commerce & Industry (7 Oct. 2024), (last visited 9 October 2024).

²⁸ Supra note 26.

²⁹ Id.

³⁰ Supra note 5.