Practical World True News Magazine

Practical World True News Magazine
All true news you need to wake up to yourself !

#TrueNews,#Business : India rejects EU requests; No legal cover for fresh investors

Fresh investments by European companies in India and vice versa after April 1 won’t enjoy legal protection under any bilateral arrangement, as India has decided not to accede to requests by the European Union.
    



Fresh investments by European companies in India and vice versa after April 1 won’t enjoy legal protection under any bilateral arrangement, as India has decided not to accede to requests by the European Union, or any other bloc or nation, to extend the validity of the current bilateral investment promotion and protection agreements (BIPAs) beyond March.

However, existing investors could enjoy protection for an additional 10-15 years even after the expiry of the agreement due to a sunset clause attached to these pacts, official sources told FE. For instance, the agreement with the Netherlands extends protection to investments made before the date of termination for 15 years more. India has made it clear that all such bilateral investment agreements with other nations, modelled after an earlier text, will become null and void on April 1, 2017, and that both existing and fresh pacts have to be based on the new model text approved by the Cabinet in December 2015, one of the sources said.

According to the new model text, a foreign company can drag the government to international arbitration in case of any dispute on investments, including tax matters, only after exhausting remedial options available under Indian laws (mainly courts), said analysts. However, the earlier text on which the extant bilateral investment pact is based allows a foreign firm to directly go for international arbitration for dispute resolution.

India had informed the EU a year in advance about the expiry of the old pacts by the end of March 2017, and stressed the need for renegotiating the investment agreements on the basis of the new model investment text. Still, the EU didn’t offer a date for starting the renegotiation process, ostensibly because it was grappling with Brexit.
However, late last month, on a visit to India, Geoffrey Van Orden, the chair of the European Parliament delegation for relations with India, said the EU would want India to extend the validity of the bilateral investment pact (beyond March). As part of the visit, Van Orden met finance minister Arun Jaitley and commerce and industry minister Nirmala Sitharaman, among others.

India’s decision comes at a time when many European companies have announced plans for multi-billion-dollar investments in India (French companies alone would invest as much as 8 billion euros in India over two to three years, France’s ambassador Alexandre Ziegler said last year). Indian firms, too, have been redrawing their investment plans for the EU after Britain’s decision last year to exit the bloc.

Analysts said India had to renegotiate the investment agreements, based on the earlier text, with various nations to avoid risks of frequent international arbitration. Vodafone in 2013 had invoked the India-Netherlands bilateral investment treaty, seeking resolution to the tax demand imposed on it by the Indian government through the enactment of a law with retrospective effect to sidestep a Supreme Court judgment that had gone in the company’s favour. Last year, Cairn Energy said it had initiated an international arbitration to seek $5.6 billion in compensation from the Indian government in case a retrospective tax demand of Rs 29,047 crore was not scrapped.

Last year, the EU had expressed concern on the fate of investment treaties between some of its members and India after the finance ministry had written to various countries seeking a review of all such pacts within a year, using the new investment text. Under the European Commission (EC) framework of law, EU members have delegated their power to the EC in Brussels to negotiate on trade or investments on their behalf.
Share on Google Plus

About Pratica Radio

We play blues,country,jazz,lounge,rock,

Top Articles