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Report No. 260

Chapter V

Dispute Settlement

A. General comment:

5.1.1 At the outset, it is relevant to note certain issues relating to the dispute settlement mechanism in investment treaty disputes. One concern is that it is believed that arbitrators in the field have strongly polarized views, and are either strongly pro-State or strongly pro-investor.87 As a result, there is a risk, which is heightened due to the lack of appellate scrutiny, that the outcome of an arbitration is determined by the constitution of the Tribunal. The International Centre for Settlement of Investment Dispute (ICSID) provides an appellate mechanism, but India is not a signatory to the ICSID mechanism, and therefore, no such appellate mechanism will apply to Indian BIT disputes.

However, some courts have held that awards arising out of BITs disputes can be challenged before the Courts at the seat (see judgements of the House of Lords in Republic of Ecuador V. Occidental Exploration & Production Co and the US Supreme Court in BG Group PLC V. Republic of Argentina).88 Therefore, it is important that India should have a say while choosing the seat in disputes involving the country, and that the seat should be carefully selected keeping in mind the consequences for appeal, etc., as a result.

87 Gus Van Harten, 'Pro-Investor or Pro-State Bias in Investment-Treaty Arbitration? Forthcoming Study Gives Cause for Concern', Investment Treaty News, 13 April 2012, available at:

88 The Republic of Ecuador V. Occidental Exploration & Production Co. Initial application under Section 67, available at:;

Appeal of this order available at:;

Substantive judgement available at:;

Appeal of this order:];


BG Group PLC V. Republic of Argentina [Majority available at:;




5.1.2 The 2015 Model provides for only ad-hoc international arbitration, and avoids reference to other fora like International Centre for Settlement of Investment Disputes (ICSID) (for States that are parties to ICSID), as well as the ICSID Additional Facility, which could be used to bring a claim against States that are not party to the ICSID. Even though India is not a party to ICSID, reference to these alternate dispute resolution methods might benefit Indian investors abroad seeking to bring a claim against other States.

Thus, by limiting the forum for dispute resolution, the 2015 Model might deny available remedies to Indian investors abroad. The India-Saudi Arabia BIT provides some guidance in this regard.89 However, since the choice of dispute resolution fora is a policy decision, the remainder of the comment in this chapter does not venture into details in this regard.

89 Article 12.4 (a) of India - Saudi Arabia BIT

Analysis of the 2015 Draft Model Indian Bilateral Investment Treaty Back

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