Union Finance Minister Nirmala Sitharaman said on Sunday that bilateral investment treaties should capture national interest in relation to regulatory powers and serve as a guide to arbitrators in resolving disputes.

She said issues related to Bilateral Investment Treaty (BIT) are unique to the sovereign and hence should be negotiated separately rather than as a part of FTA agreement.

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The finance minister was speaking at the inauguration of the first PG Certificate Course on International Commercial & Investment Treaty Arbitration in New Delhi.

Stating that arbitrators have often ignored the judicial decisions of the host country, she said an investment treaty should not only provide better regulatory powers to the nations but also serve as guidance to arbitrators to restore faith in arbitration. “I strongly believe moving forward, the framework of investment treaties should capture national interests in relation to regulatory powers and strengthen guidance for arbitrators in resolving disputes, keeping in mind nations’ interests and circumstances as well,” Sitharaman said.

The finance minister’s statement came at a time when India is negotiating BITs with the UK, Saudi Arabia, Qatar, and the European Union (EU).

During her speech, citing UNCTAD reports, she said there have been 1,368 registered investment treaty cases.

“On average, most of these cases – almost 70% of them – are pursued against developing nations based on the old-generation treaties and that’s a worrying element for developing countries. It allows the investors to maliciously seek unfair benefits from them,” the minister said.

Nirmala Sitharaman said some commercially deep-pocket parties buy the case from one of the arbitration parties and they run this for a long period, which no sovereign state can afford to fight in different jurisdictions. “Then, at the end of the day, the case is won by the party with a deep pocket. It’s not the same for all cases but there are anecdotal examples from many developing countries,” she added.

Corporations have used Investor-State Dispute Settlement mechanisms via investment treaties to challenge government policies, environmental regulations and public interest laws, she explained.