New Delhi plans to join Investment Disputes Convention
Economic Times | 13 Sep 2008
New Delhi plans to join Investment Disputes Convention
Dipshika Sikarwar, ET Bureau
NEW DELHI: New Delhi is considering a proposal to join the World Bank convention, International Convention on Settlement of Investment Disputes (ICSID).
The convention provides for the conciliation and arbitration of investment disputes between member-countries and individual investors.
Although India has been a member of the United Nations Convention on the Recognition & Enforcement of Foreign Arbitral Awards, called the New York Convention, it had kept out of ICSID, popularly known as the Washington Convention.
Pressure on New Delhi has increased as it begins negotiations on an investment agreement with US. Sources in the department of industrial policy & promotion (Dipp) said the government is weighing the pros and cons of joining the convention.
Sources said the view now is that joining such a convention may be in the interest of domestic companies as their overseas investments have increased manifold in recent years.
Takeovers and buyouts, joint ventures with overseas companies and strategic investments have been on an upswing and have contributed to the rise in outbound investments from the country. Dipp has called for inter-ministerial discussions on the convention and the issue of whether India should join it.
India has so far resisted the pressure to join the convention as it felt it would entail conceding sovereign space. For example, if India had been a member of the convention at the time of Enron imbroglio, the issue would have had to be settled as per the convention.
In fact, New Delhi could well have been forced to compensate for the setback to investment by the company as per the international investment norms.
However, now India is negotiating comprehensive economic partnership agreement or investment agreements as part of trade arrangements with may trade blocs and countries, including the European Union (EU), the Association of Southeast Asian Nations (Asean) and the US.
Since the country has seen increase in outward investments, it may well be the time for it to shrug off earlier reservations and join the convention.
