Justice Nagarathna made these comments during the inauguration of the first-ever Post Graduate Certificate Diploma Course on International Commercial and Investment Treaty Arbitration at the National Law University (NLU) Delhi.
NEW DELHI: Justice BV Nagarathna of the Supreme Court on Sunday stressed the importance of strengthening India’s capabilities in international commercial and investment arbitration.
She explained that India must build its own pool of legal professionals to manage complex international disputes, rather than relying on foreign law firms. This, she said, would not only help save costs but also raise India’s standing in the global dispute resolution arena.
Justice Nagarathna made these comments during the inauguration of the first-ever Post Graduate Certificate Diploma Course on International Commercial and Investment Treaty Arbitration at the National Law University (NLU) Delhi. She emphasized that the course would be crucial in training law students, practicing lawyers, and government officials to better handle such disputes in the future.
“The establishment of the Chair on Investment Treaties and International Commercial Arbitration at NLU Delhi will have a transformative impact,” said Justice Nagarathna. “It will not only create qualified lawyers and public officers equipped to defend India, but also contribute to academic scholarship in the field.”
India’s involvement in international investment treaties, especially in bilateral investment treaties (BITs), has a long history.
Justice Nagarathna traced this journey, pointing out that India signed its first BIT with the United Kingdom in 1994. Since then, India has faced numerous challenges, especially in cases of investment arbitration. One major turning point was the 2011 White Industries case, where India was found to have violated its treaty obligations due to delays in its judicial system.
“With due respect, I find that the award reflects the lack of appreciation of the Indian judicial system, which caters to a vast population of over 1.4 billion people in accordance with the Indian law,” she remarked, showing how international tribunals sometimes misinterpret the challenges faced by India’s legal system.
To address such issues, India introduced a revised Model BIT in 2016. This updated template has helped renegotiate treaties, leading to the termination of 77 older-generation BITs. The revised BIT ensures that sunset clauses protect the rights of investors for a limited time, while also ensuring more clarity and fairness in investment treaties. In addition, India has worked to issue Joint Interpretative Statements with other countries to prevent arbitrators from interpreting BIT provisions too broadly.
Justice Nagarathna also highlighted that India is not the only country reconsidering its BIT framework. Nations such as Australia, Germany, Indonesia, South Africa, and several European and Latin American countries are all reviewing their investor-state dispute settlement (ISDS) systems. These changes show that the global community is rethinking how to balance the interests of investors with the sovereign rights of states to regulate in the public interest.
“Disputes brought by foreign investors challenging policy decisions of the government taken in public interest is a matter of serious concern. These disputes have raised serious doubts regarding the legitimacy of the process of dispute resolution itself,” Justice Nagarathna said, expressing concerns about how some international disputes undermine the sovereignty of states.
Union Finance Minister Nirmala Sitharaman, who was the chief guest at the event, also spoke on the importance of well-drafted investment treaties. She emphasized the need to ensure that treaties are precise in order to protect India’s economic interests.
“Based on old generation treaties, it sometimes allows investors to seek malicious benefit from them,” said Sitharaman. “Arbitrators often have ignored judicial decisions of the host country and even findings such as corruption etc found by the host country and puts states at conflicting positions to accept such awards.”
Former Supreme Court Judge Justice Indu Malhotra, who played an important role in setting up the course, also shared her views. She pointed out the growing trend of hedge funds buying arbitral awards and aggressively pursuing enforcement actions across multiple jurisdictions.
Justice Malhotra suggested that India needs a more dedicated approach to such cases. She recommended setting up a specialized bench in the Supreme Court to handle disputes related to international commercial and investment arbitration.
She further called for the establishment of a National Judicial College to educate judges on the changing legal landscape in these areas, ensuring that they are better equipped to handle international arbitration matters.
FOLLOW US FOR MORE LEGAL UPDATES ON YOUTUBE
