Pakistan has decided to terminate 23 bilateral investment treaties (BITs) with different countries in order to avoid international arbitration with foreign firms on commercial contracts.
Bilateral Investment Treaty (BIT) is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state. This is also known as Foreign Direct Investment (FDI.
Pakistan is the pioneer of BITs as the World’s First Bilateral Investment Treaty was signed between Pakistan and Germany on November 25, 1959. At present, due to the increasing Investor-State Dispute Settlement (ISDS) cases, there is a decrease in the signing of the new BITs.
Most of the Pakistani BITs contained a provision to expropriation, fair, and equitable treatment, national treatment, most favored nation, and prohibition of performance requirements so shrinking the policy space for the government to adopt any measure of public interest.
Pakistan has now decided to terminate 23 bilateral investment treaties with different countries to avoid international arbitration with foreign firms on commercial contracts. At present, there are 10 cases in different international arbitral forums, lodged by foreign investors.
Other than these cases, there are nine other cases but these cases can be terminated or reformed by engaging the concerned countries bilaterally. Pakistan has the option of taking these nine agreements with the concerned countries to revise them in line with its revised BIT strategy.
According to the Board of Investment, under Section 9(m) of the Board of Investment Ordinance 2001, the BOI is mandated to negotiate and finalize an agreement for promotion and protection on investments/bilateral investment treaties with other countries. Pakistan has concluded 53 BITs with 48 countries so far. Boar of Investment has prepared a strategy for reforming the country’s present and future BITs.
In this regard, a summary was prepared and circulated amongst the concerned ministries/departments and provisional governments for their comments.