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Report No. 260

(ii) Suggested draft:

14.4(i)A(b). 6 months have elapsed from the conclusion of negotiations or other attempts to amicably settle the dispute pursuant to Article 14.3 (iv).

5.5.2 The language in Article 14.4(ii) may also require reconsideration. It specifies that if an investment dispute cannot be settled amicably, and provided there has been full compliance with the conditions under Article 14.3 and 14.4(i), including 'written consent for the submission of the claim to arbitration by the Parties', the matter maybe referred to arbitration. This seems to suggest that there is a further requirement, besides this treaty, where the parties must consent in writing to the reference to arbitration.

5.5.3 However, the purpose of a BIT and the ISDS mechanism contained in the treaty, is to provide for a neutral mechanism such as arbitration in case a dispute arises. Under the 2015 Model, either party may deny a written consent to refer the matter to arbitration thus making the ISDS mechanism in the BIT redundant.

This provision appears to have been derived from the general principle evolved from ICSID jurisprudence that an arbitration clause in an investment dispute is a standing offer to arbitrate on behalf of the State which the investor may or may not accept.92 It appears that the intention has been to use this position as the starting point but dilute it so as to not bind the State as well. Such an amendment converts the arbitration clause into an agreement to agree. States on the other end of the negotiating table might not find such a formulation acceptable.

92 Alan Redfern, Law and Practice of International Commercial Arbitration;
http://caselaw.findlaw.com/us-2nd-circuit/1559739.html [in Republic of Ecuador v. Chevron, the US Circuit Judge says that a BIT is a standing offer to arbitrate]; Zachary Douglas, The International Law of Investment Claims

(iii) Suggested draft:

It is suggested the Article 14.4(ii) be redrafted to omit the line requiring written consent from the submission of the claim to arbitration to read as follows:

14.4(ii) In the event the Investment Dispute cannot be settled amicably, and provided there has been full compliance with the conditions set forth in Article 14.3 and 14.4 (i),the Investor, on behalf of an Investment that the Investor directly owns or controls, may submit to arbitration under this Article a claim ("Claim"):

a. ...

b. ...



Analysis of the 2015 Draft Model Indian Bilateral Investment Treaty Back




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