India opposes Investor-State dispute settlement under WTO

The EU’s effort to create an investor-state dispute settlement mechanism (ISDS) at WTO was opposed by countries led by India, Japan and Brazil. According to Commerce Minister Nirmala Sitharaman, EU and Canada have made an informal proposal for creating such an arrangement within the present WTO format at the end of the Davos WEF.

The WTO’s eleventh Ministerial Conference is about to take place in December at Buenos Aires, Argentina. A fresh wave of new issues is expected to be launched at least at the discussion level during the MC.

Already, investor disputes are settled under Bilateral Investment Protection Treaties (BIT). India has signed nearly 84 BITs so far, giving investor protection to investors of other countries. But, several disputes involving the Vodafone and Nokia’s tax disputes are yet to be closed.  

The EU proposed ISDS gives more option and rights to investors to sue governments at WTO. Similarly, foreign companies can claim compensation against losses when it comes after policy changes by the government, even if there is no direct action against the concerned entity.

Investment dispute right for firms may make large number of disputes at WTO. Ms Nirmala Sitharaman added that such investment disputes should be settled at domestic courts rather than going to international bodies. The ISDS is proposed by EU and Canada as both of them have created one among them for giving advanced level of protection.


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