‘Cornered’ government puts all BIPA negotiations on hold

The Commerce Ministry has decided to put on hold all Bilateral Investment and Protection Agreements (BIPA) negotiations with foreign nations. The decision came after at least eight foreign investors served show-cause notices to the government citing benefits under BIPA, Union Minister of State (MoS) for Finance, Namo Narain Meena said in the Lok Sabha on Friday.

“In view of an adverse arbitration notice in the case of White Industries Australia Ltd and various other dispute or arbitration notices, the government has decided to put all BIPA negotiations on hold,” Meena said.

The number of foreign companies serving show-cause notice to the government increased in the wake of the Vodafone tax dispute. Foreign companies including Vodafone International Holdings, CC Devas, Mauritius, Germany’s Deutsche Telekom, Russia’s Sistema Joint Stock Financial Corporation and Children Investment Fund, UK are believed to have approached the government. “The government has decided to handle various disputes through the mechanism of an inter-ministerial group chaired by the secretary of the administrative ministry concerned,” Meena said.

Treaties such as the BIPA allow for the safeguarding of investor interests in both countries.

Earlier this month, India informed Portugal that it would re-negotiate BIPA only once the model text is finalised. Union Minister of Commerce, Industry and Textiles, Anand Sharma had informed Portuguese Foreign Affairs Minister Paulo Portas at their meeting in the capital in thie regard.

“We are not speaking on BIPA. The model text is lying with the Finance Ministry. Only after the model text is approved will we once again include BIPA in our bilateral talks,” said a Commerce Ministry official. India has currently 72 BIPAs with other nations.

With foreign countries demanding country and even company-specific BIPA, Prime Minister Manmohan Singh had to cancel his UAE trip in March. Even though the Ministry of External Affairs said that cancellation had nothing to do with BIPA, government sources say the inability to sign BIPA was the main reason.