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Report No. 260

B. Article 8. Scope of this Chapter

(i) Analysis and comment:

4.2.1 Article 8.1 sets out the objective of including this Chapter in the 2015 Model, i.e., to ensure that investments are in compliance with local laws and enhance their contribution to inclusive growth and sustainable development. Article 8.1 appears to have merely interpretive value, because the remainder of the Article and the Chapter do not, at any stage, lay down what "inclusive growth" or "sustainable development" entail, nor do they impose any independent obligations relating to these two concepts on the investor.

4.2.2 The terms "inclusive growth" and "sustainable development" are a signature of "new generation" investment policies and are also used in the preamble of the 2015 Model. However, the terms are not used again in the 2015 Model except in Article 8.1. Even in Article 8.1, the terms have little substantive value, and can be used, at best, to indicate the treaty's intent, which has already been done through the use of these terms in the preamble.

As the intent of the Chapter appears to be to impose certain standards of responsible behaviour on the part of the investors (for instance, the rest of the Chapter refers to obligations against corruption, disclosures compliance with the laws of the Host State, and so on), Article 8.2 provides relatively better guidance for an investor regarding the objective of the chapter, in context of the Articles that follow. Thus, it may be appropriate to redraft Articles 8.1 and 8.2 to a single clause.

Analysis of the 2015 Draft Model Indian Bilateral Investment Treaty Back

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