Bilateral Investment Protection Agreement
As with all the new reforms , the foreign investment policy of govt of India was also liberalised in 1991 .
Negotiations undertaken with a number of countries to enter into Bilateral Investment Promotion & Protection Agreement (BIPAs)
in order to promote and protect on reciprocal basis investment of the investors.
Government of India have, so far, (as on July 2012) signed BIPAs with 82 countries out of which 72 BIPAs have already come into force and the remaining agreements are in the process of being enforced.
BIPA applies to the “investment” made by an “investor” of one contracting party (the signing country) in the territory of the other.
BIPA benefits can be claimed by an “investor” who could be a national of a signing country, or a legal person incorporated in that country.
Further, “investments” is widely defined to include everything that one expects in a multinational’s business —
movable or immovable property,
shares and other securities,
contractual rights,
intellectual property rights,
concessions for prospecting, research and exploitation of natural resources, and so on.
The agreement provides that each contracting party shall
promote in its territory investments by an investor of the other contracting party.
Further, equitable treatment shall be provided to such investments.
BIPA provides for National and Most Favoured Nation (MFN) treatment.
Thus a contracting party should treat investors of the other party as favourably as it would treat its own, or investors of any other country. Similar treatment is required for the “returns” on the investments. This does not apply to benefits under certain obligations arising from other international agreements or regional cooperation agreements.
Similarly, matters pertaining to taxation are excluded from National and MFN treatment
A detailed mechanism is available for settlement of disputes —
the Arbitral Tribunal for disputes between the contracting parties; and
the International Arbitration for disputes between an investor and a contracting party.
Recently, Vodafone considered arbitration under BIPA for its tax dispute with Indian revenue authorities.
FDI Vs BIPA Vs CEPA
BIPA – post establishment investment whereas
FDI – pre establishment investment agreement
Therefore FDI not covered under BIPA.
CEPA – Pre and Post establishment commitments
As a result of a volatile economic or political environment or other reasons, investments by an investor of one country in another may be adversely affected.
Recent instances include GMR losing an airport contract in Maldives,
freezing bank accounts in Cyprus, and
scrapping of telecom licences among others.
It may be possible to get some protection in some cases and, accordingly,
BIPA becomes relevant when investing in another country and thereafter. It is understood that recently Etihad’s investment in Jet Airways was kept on hold as BIPA between India and UAE was insisted upon.
( Now in mrunal bhai ’s style the boring part ,,,,,,,,,,,,,,,,,,,,,,,,,,, )
LIST OF COUNTRIES WITH WHOM BILATERAL INVESTMENT PROMOTION AND PROTECTION AGREEMENTS (BIPA) HAS BEEN SIGNED (AS ON JULY, 2012)
S.N Country Date of Agreement Date of Enforcement
1. United Kingdom 14th March 1994 6th January 1995
2. Russian Federation 23rd December 1994 5th August 1996
3. Germany 10th July 1995 13th July 1998
4. Malaysia 3rd August 1995 12th April 1997
5. Denmark 6th September 1995 28th August 1996
6. Turkmenistan 20th September 1995 27th February 2006
7. Netherlands 6th November 1995 1st December 1996
8. Italy 23rd November 1995 26th March 1998
9. Tajikistan 13th December 1995 23rd November 2003
10. Israel 29th January 1996 18th February 1997
11. South Korea 26th February 1996 7th May 1996
12. Poland 7th October 1996 31st December 1997
13. Czech. Republic 11th October 1996 6th February 1998
14. Kazakhstan 9th December 1996 26th July 2001
15. Sri Lanka 22nd January 1997 13th February 1998
16. Vietnam 8th March 1997 1st December 1999
17. Oman 2nd April 1997 13th October 2000
18. Switzerland 4th April 1997 16th February 2000
19. Egypt 9th April 1997 22nd November 2000
by Aruna S.
For an extended list visit http://finmin.nic.in/bipa/bipa_index.asp
References :
• http://finmin.nic.in/bipa/bipa_index.asp
• http://business.gov.in/legal_aspects/bipa.php
• http://www.thehindu.com/business/Industry/fdi-in-multibrand-retail-wont-take-away-right-of-states-centre/article3911785.ece
• I would like to say http://pib.nic.in ,but it involves tedious search , @ pib information is scattered here and there , like all govt websites.
As with all the new reforms , the foreign investment policy of govt of India was also liberalised in 1991 .
Negotiations undertaken with a number of countries to enter into Bilateral Investment Promotion & Protection Agreement (BIPAs)
in order to promote and protect on reciprocal basis investment of the investors.
Government of India have, so far, (as on July 2012) signed BIPAs with 82 countries out of which 72 BIPAs have already come into force and the remaining agreements are in the process of being enforced.
BIPA applies to the “investment” made by an “investor” of one contracting party (the signing country) in the territory of the other.
BIPA benefits can be claimed by an “investor” who could be a national of a signing country, or a legal person incorporated in that country.
Further, “investments” is widely defined to include everything that one expects in a multinational’s business —
movable or immovable property,
shares and other securities,
contractual rights,
intellectual property rights,
concessions for prospecting, research and exploitation of natural resources, and so on.
The agreement provides that each contracting party shall
promote in its territory investments by an investor of the other contracting party.
Further, equitable treatment shall be provided to such investments.
BIPA provides for National and Most Favoured Nation (MFN) treatment.
Thus a contracting party should treat investors of the other party as favourably as it would treat its own, or investors of any other country. Similar treatment is required for the “returns” on the investments. This does not apply to benefits under certain obligations arising from other international agreements or regional cooperation agreements.
Similarly, matters pertaining to taxation are excluded from National and MFN treatment
A detailed mechanism is available for settlement of disputes —
the Arbitral Tribunal for disputes between the contracting parties; and
the International Arbitration for disputes between an investor and a contracting party.
Recently, Vodafone considered arbitration under BIPA for its tax dispute with Indian revenue authorities.
FDI Vs BIPA Vs CEPA
BIPA – post establishment investment whereas
FDI – pre establishment investment agreement
Therefore FDI not covered under BIPA.
CEPA – Pre and Post establishment commitments
As a result of a volatile economic or political environment or other reasons, investments by an investor of one country in another may be adversely affected.
Recent instances include GMR losing an airport contract in Maldives,
freezing bank accounts in Cyprus, and
scrapping of telecom licences among others.
It may be possible to get some protection in some cases and, accordingly,
BIPA becomes relevant when investing in another country and thereafter. It is understood that recently Etihad’s investment in Jet Airways was kept on hold as BIPA between India and UAE was insisted upon.
( Now in mrunal bhai ’s style the boring part ,,,,,,,,,,,,,,,,,,,,,,,,,,, )
LIST OF COUNTRIES WITH WHOM BILATERAL INVESTMENT PROMOTION AND PROTECTION AGREEMENTS (BIPA) HAS BEEN SIGNED (AS ON JULY, 2012)
S.N Country Date of Agreement Date of Enforcement
1. United Kingdom 14th March 1994 6th January 1995
2. Russian Federation 23rd December 1994 5th August 1996
3. Germany 10th July 1995 13th July 1998
4. Malaysia 3rd August 1995 12th April 1997
5. Denmark 6th September 1995 28th August 1996
6. Turkmenistan 20th September 1995 27th February 2006
7. Netherlands 6th November 1995 1st December 1996
8. Italy 23rd November 1995 26th March 1998
9. Tajikistan 13th December 1995 23rd November 2003
10. Israel 29th January 1996 18th February 1997
11. South Korea 26th February 1996 7th May 1996
12. Poland 7th October 1996 31st December 1997
13. Czech. Republic 11th October 1996 6th February 1998
14. Kazakhstan 9th December 1996 26th July 2001
15. Sri Lanka 22nd January 1997 13th February 1998
16. Vietnam 8th March 1997 1st December 1999
17. Oman 2nd April 1997 13th October 2000
18. Switzerland 4th April 1997 16th February 2000
19. Egypt 9th April 1997 22nd November 2000
by Aruna S.
For an extended list visit http://finmin.nic.in/bipa/bipa_index.asp
References :
• http://finmin.nic.in/bipa/bipa_index.asp
• http://business.gov.in/legal_aspects/bipa.php
• http://www.thehindu.com/business/Industry/fdi-in-multibrand-retail-wont-take-away-right-of-states-centre/article3911785.ece
• I would like to say http://pib.nic.in ,but it involves tedious search , @ pib information is scattered here and there , like all govt websites.
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