Stronger Together: UK-India Deal Unlocks New Protections for Global Investors

The new India-United Kingdom investment pact will have a crucial provision enabling firms to sue either or both governments if they believe policy changes have unfairly damaged their investments or revenues, sources familiar with the negotiations said. The ISDS mechanism provision is designed to protect companies from the risk of being discriminated against by domestic laws and is set to be finalized as part of a broader free trade agreement.

 

This is a major deviation as Britain has not included ISDS in any of its bilateral free trade agreements since it left the EU, although it is still a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). India has previously tried to restrict ISDS in its agreements and had also terminated an earlier investment treaty with the UK in 2017 due to concerns regarding the mechanism.

 

British officials are said to have demanded the ISDS clause, intended to give greater confidence to British companies investing in India. The Indian government has thus far kept quiet on the negotiations. Negotiations, however, continue on issues like whisky duties, cars, agricultural products, and pharma regulatory issues.

 

The British trade ministry stressed its commitment to fair treatment of companies, tariff cuts, and easing trade between the two nations. The Labour government, which came into power a year ago, has attempted to present itself as business-friendly and moving forward with trade talks.

 

The treaty, once signed, will create a new paradigm of investment protection and resolution of disputes, which can redefine the boundaries of cross-border trade between the UK and India.

 

Source: Reuters