India-UAE’s Bilateral Investment Treaty comes into effect; Offers Investment protection to Investors

The Bilateral Investment Treaty (BIT) between the Government of the Republic of India and the Government of the United Arab Emirates (UAE) was signed on February 13, 2024, in Abu Dhabi, UAE, and went into effect on August 31, 2024. The enforcement of this new BIT with the UAE provides continuity of investment protection to investors in both countries, as the previous Bilateral Investment Promotion and Protection Agreement (BIPPA) between India and the UAE, signed in December 2013, terminated on September 12, 2024.

UAE is the seventh largest, representing 3% of total Foreign Direct Investment (FDI) received in India between April 2000 and June 2024, with a cumulative investment of nearly $19 billion. India also makes 5% of its total Overseas Direct Investments in the UAE, totalling $15.26 billion between April 2000 and August 2024.

India-UAE BIT 2024 is expected to increase the comfort level and boost the confidence of the investors by assuring a minimum standard of treatment and non-discrimination while providing an independent forum for dispute settlement by arbitration.

However, while protecting investors and investments, a balance has been maintained with regard to the state’s right to regulate, allowing for enough policy space.

The signing and execution of the BIT demonstrates both countries’ shared commitment to strengthening economic cooperation and building a more robust and resilient investment environment. The Treaty is expected to encourage increasing bilateral investment, which will benefit both countries’ businesses and economies.

Some of the key features of the India-UAE BIT 2024

• Closed asset-based definition of Investment with coverage of Portfolio Investment.
• Treatment of Investment with obligation for no denial of justice, no fundamental breach of due process, no targeted discrimination and no manifestly abusive or arbitrary treatment.
• Scope carve out for measures such as those related to taxation, local government, government procurement, subsidies or grants and Compulsory license.
• Investor-State Dispute Settlement (ISDS) through arbitration with mandatory exhaustion of Local remedies for 3 years.
• General and Security Exceptions.
• Right to Regulate for State.
• No investor claim in case investments are involved with corruption, fraud, round tripping etc.
• Provision on National Treatment.
• Treaty provides for protection to investments from Expropriation and provides for Transparency, Transfers and Compensation for losses.

To Read India-UAE 2024 BIT – Click Here