¹ IIA, as a generic term, means Bilateral Investment Treaties (BITs), investment chapters in Free Trade Agreements (FTAs) and in Comprehensive Economic Cooperation Agreements (CECAs). In India, IIAs are called ‘Bilateral Investment Promotion Agreements’ (BIPAs). The term IIAs, in this paper, does not include Double Taxation Avoidance Agreements. The text of Indian IIAs, referred to in this paper, is taken from the eight volumes of Compendium of India's investment agreements published by the Ministry of Finance, Government of India (on file with the author) [Ministry of Finance Compendium].

² See Salacuse, Jeswald W., “BIT by BIT: The Growth of Bilateral Investment Treaties and Their Impact on Foreign Investment in Developing Countries” (1990) 24 Int'l Law 655 at 659Google Scholar.

³ For a general discussion on IIAs, see Newcombe, A. & Paradell, L., Law and Practice of Investment Treaties (The Hague: Kluwer, 2009)Google Scholar; Lowenfeld, A.F., International Economic Law, 2d ed (Oxford: Oxford University Press, 2008) at 467–591Google Scholar; McLachlan, C.et al, International Investment Arbitration – Substantive Principles (Oxford: Oxford University Press, 2007)Google Scholar; Dolzer, R. & Schreuer, C., Principles of International Investment Law (Oxford: Oxford University Press, 2008) [Dolzer and Schreuer (2008)]CrossRefGoogle Scholar; Dolzer, R. & Stevens, M., Bilateral Investment Treaties (The Hague: Kluwer, 1995)Google Scholar; Sornarajah, M., The International Law on Foreign Investment, 3d ed (Cambridge: Cambridge University Press, 2010) at 204–314 [Sornarajah (2010)]CrossRefGoogle Scholar; Muchlinski, P.T.et al, eds, The Oxford Handbook of International Investment Law (Oxford: Oxford University Press, 2008)CrossRefGoogle Scholar; Salacuse, J., The Law of Investment Treaties (Oxford: Oxford University Press, 2010) [Salacuse (2010)]CrossRefGoogle Scholar.

⁴ Jujjavarapu, Aparna D., Judicial Review of International Commercial Arbitral Awards by National Courts in the United States and India (LLM Thesis, University of Georgia School of Law, 2007) online: <http://digitalcommons.law.uga.edu/stu_llm/82>>Google Scholar; Kachwaha, Sumeet, “Enforcement of Arbitration Awards in India” (2008) 4 Asian Int'l Arb J 64Google Scholar; Khindria, T., “Enforcement of Arbitration Awards in India” (1995) 23 Int'l Bus Law 11Google Scholar; Reddy, V. & Nagaraj, V., “Arbitrability: The Indian Perspective” (2002) 19 J Int'l Arb 117Google Scholar.

⁵ Work has been done on the issue of enforceability of investor-state arbitral awards in other jurisdictions; for instance, for enforcement of such awards in Canada see Choudhury, B., “Determining the Appropriate Level of Deference for Domestic Court Reviews of Investor-State Arbitral Awards” (2007) 32 Queen's LJ 602Google Scholar.

⁶ Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June 1958, 7 ILM 1046 (1968)Google Scholar.

⁷ Convention on the Execution of Foreign Arbitral Awards, done at Geneva, 26 September 1927, (1927) 92 LoNTS 30Google Scholar

⁸ Arbitration and Conciliation Act, 1996, Law No. 26 of 1996, 16 August 1996, § 5 [Indian Arbitration Act].

⁹ In this regard also see Law Commission of India, 176^th Report on the Arbitration and Conciliation (Amendment) Bill 2003; Parliamentary Standing Committee, Report on the Arbitration and Conciliation (Amendment) Bill, 2003 (2005)Google Scholar.

¹⁰ India, Ministry of Law and Justice, Press Release, “Amendments in Arbitration and Conciliation Act 1996” (7 April 2010) online: <http://www.pib.nic.in/release/release.asp?relid=60108>>Google Scholar.

¹¹ The fact that Ministry of Law (2010), infra note 15, contains this bill as one of the annexures is ample testimony to the continued relevance of the bill.

¹² Venture Global Engineering v. Satyam Computers, (2008) 4 SCC 190 [Venture]Google Scholar.

¹³ For a detailed critique of this case see Sabharwal, D., “Another Setback for Indian Arbitration (and Foreign Investors)” (2008), online: <http://www.whitecase.com/idq/spring_2008_4/> [Sabharwal (2008)]Google Scholar; Rebello, A.P., “Of Impossible Dreams and Recurring Nightmares: The Set Aside of Foreign Awards in India” (2010) 6(1) Cambridge Student L Rev 274Google Scholar; Jain, A.N., “Yet Another Misad-Venture by Indian Courts in Venture Judgement” (2010) 26 Arb Int'l 251 [Jain (2010)]CrossRefGoogle Scholar; Sattar, S., “National Courts and International Arbitration: A Double Edged Sword?” (2010) 27 J Int'l Aib 51 at 64–65 [Sattar (2010)]Google Scholar. In this regard also see Zaiwalla, S., “Commentary on the Indian Supreme Court Judgment in Venture Global Engineering v. Satyam Computers Services Ltd” (2008) 25 J Int'l Arb 507Google Scholar, who has argued that the Venture ruling was justifiable given the complex facts of the case.

¹⁴ The Ministry of Law and Justice is a limb of the Central Government of India. It comprises of the Legislative Department and the Department of Legal Affairs. The Department of Legal Affairs is concerned with advising the various Ministries of the Central Government while the Legislative Department looks after the drafting of principal legislation for the Central Government. For more on the ministry see <http://lawmin.nic.in/>.

¹⁵ India, Ministry of Law, Amendments to the Arbitration & Conciliation Act, 1996 – A Consultation Paper (2010), online: <http://lawmin.nic.in/la/consultationpaper.pdf> [Ministry of Law (2010)]+[Ministry+of+Law+(2010)]>Google Scholar.

¹⁶ Sabharwal (2008), supra note 13.

¹⁷ Ministry of Law (2010), supra note 15 at 29.

¹⁸ Ministry of Law (2010), supra note 15 at 29.

¹⁹ Capital India Power Mauritius I and Energy Enterprises (Mauritius) Company v. Maharashtra Power Development Cooperation Limited (27 April 2005), Case No. 12913/MS (International Court of Arbitration of the ICC), available at <http://ita.law.uvic.ca/documents/Dabhol_award_050305.pdf>.

²⁰ “GE settles Dabhol Issue”, Indian Express (3 July 2005), online: http://www.indianexpress.com/oldStory/73760>>Google ScholarPubMed.

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²³ India, Department of Industrial Policy & Promotion, Fact Sheet on Foreign Direct Investment (FDI) from August 1991 to March 2010, online: <http://dipp.nic.in/fdi_statistics/india_FDI_March2010.pdf>.

²⁴ This is up to 31 March 2010. In India the financial year is from 1 April to 31 March of the next year. All the references to different years given in the text are from 1 April to 31 March of the next year.

²⁵ Ostwal, T.P. & Solanki, M., “The Vodafone Tax Dispute – A Landmark Judgment of the Bombay High Court” (2010), online: <http://wwww.bcasonline.org/articles/artin.asp?961>Google Scholar. For more on this case see Keyal, A. & Advani, P.R., “The Vodafone Judgement – Wider Concerns of Withholding Tax Under the Income Tax Act” (2010) 3 NUJS L Rev 511Google Scholar.

²⁶ Bisoi, D., “Posco Plans Hit Hurdle in Orissa High Court”, Financial Express (15 July 2010), online: <http://www.financialexpress.com/news/posco-plans-hit-hurdle-in-orissa-high-court/646681/0>Google Scholar.

²⁷ India, Ministry of Finance, Introduction Material, online: <http://www.finmin.nic.in/the_ministry/dept_eco_affairs/dea.html>. The Ministry of Finance also takes the help of other ministries in this process such as the Ministry of External Affairs and Ministry of Commerce. The negotiations on CECAs containing chapters on investment are anchored by the Ministry of Commerce with Ministry of Finance playing a supporting role. Other departments of the Government of India are also involved in negotiating IIAs like the Legal and Treaties Division of the Ministry of External Affairs and the Ministry of Commerce.

²⁸ For more on this see Banga, R., “Impact of Government Policies and Investment Agreements on FDI Inflows”, Indian Council for Research on International Economic Relations Working Paper No. 116 (New Delhi: ICRIER, 2003)Google Scholar; Ranjan, Prabhash, “Indian Investment Treaty Programme in Light of Global Experiences” (2010) 45 Economic & Political Weekly 68 [Ranjan (2010)]Google Scholar.

²⁹ Ministry of Finance Compendium, supra note 1.

³⁰ Ibid.

³¹ The India-Korea CECA (containing the chapter on investment) was signed in 2009 and became effective from 1 January 2010. However, India also has an IIA with Korea signed in 1996. This IIA has not been repealed and hence as of now, both the IIAs (that is the BIT and the investment chapter of the CECA) are in existence. However, this paper has left out the IndiaKorea IIA of 1996 and has included the investment chapter of CECA signed with Korea in 2009 as India-Korea IIA. India-Japan and India-Malaysia CECAs have also been left out because they are yet to be enforced.

³² India, Ministry of Commerce and Industry, India-Singapore CECA, online: <http://commerce.nic.in/trade/international_ta_framework_ceca.asp>.

³³ FE Bureau, “India Japan CEPA to boost bilateral trade to US$25 billion”, Financial Express (17 February 2011), online: <http://www.financialexpress.com/news/indiajapan-cepa-to-boost-bilateral-trade-to-25-bn/750965/>>Google ScholarPubMed.

³⁴ India already has an IIA with Malaysia.

³⁵ India, Department of Commerce, “Trade Agreements”, online: <http://commerce.nic.in/trade/international_ta.asp?id=2&trade=i>. India already has IIAs with Indonesia and Mauritius.

³⁶ European Parliament, “EU-India Free Trade Agreement”, online: <http://www.europarl.europa.eu/oeil/FindByProcnum.do?lang=en&procnum=INI/2008/213>.

³⁷ Srinivasan, G., “US Keen to Push for Bilateral Investment Treaty” (2009), online: <http://www.blonnet.com/2009/10/26/stories/2009102651830100.htm>Google Scholar.

³⁸ Foreign Affairs and International Trade Canada, “Background on Canada-India Foreign Investment Promotion and Protection Agreement”, online: <http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/fipa-apie/india-inde.aspx?lang=en>>Google Scholar.

³⁹ For more on India's IIA programme see Krishan, D., “India and International Investment Law” in Patel, B.N., ed, India and International Law, vol. 2 (Leiden/Boston: Martinus Nijhoff, 2008) 292-93Google Scholar; Ranjan, P., “International Investment Agreements and Regulatory Power: Case Study of India” (2008a) 9 J World Investment & Trade 243CrossRefGoogle Scholar; Ranjan (2010), supra note 28.

⁴⁰ See Article I(b) of the Indian Model IIA. Also see Ranjan, Prabhash, “Definition of Investment in Bilateral Investment Treaties and Regulatory Discretion” (2009) 26 J Int'l Arb 219Google Scholar. On the object and purpose of Indian IIAs see Ranjan, P., “Object and Purpose of Indian International Investment Agreements: Failing to Balance Investment Protection and Regulatory Power” in Bath, V. & Nottage, L., eds, Foreign Investment and Dispute Resolution Law and Practice in Asia (London: Routledge, 2011) (forthcoming)Google Scholar.

⁴¹ Ranjan, P., “Medical Patents and Expropriation in International Investment Law – With Special Reference to India” (2008b) 5 Manchester J Int'l Econ L 72Google Scholar; Gibson, C., “A Look at the Compulsory License in Investment Arbitration: The Case of Indirect Expropriation” (2010) 25 Am U Int'l L Rev 358Google Scholar.

⁴² UNCTAD, “Latest Developments in Investor-State Dispute Settlement, IIA Issues Note No 1” (2010), online: <http://www.unctad.org/en/docs/webdiaeia20103_en.pdf>>Google Scholar.

⁴³ Ibid.

⁴⁴ Vienna Convention on the Law of Treaties, 27 January 1980, 1155 UNTS 331, 8 ILM 679.

⁴⁵ Directive Principles of State Policy, enumerated in Chapter IV of the Constitution of India, are directives to the State intended to assist in the creation of a welfare state. However, these are not enforceable before any court of law. Nevertheless, their importance as the ‘conscience of the Constitution’ has been emphasised by the Indian Supreme Court on several occasions. See e.g. Pathumma and Others v. State Of Kerala And Others, AIR 1978 SC 771Google Scholar; Madhu Kishwar and Others v. State Of Bihar and Others, AIR 1996 SC 1864Google Scholar.

⁴⁶ For more on ICA, see Redfern, A.et al, Redfern and Hunter on International Arbitration, 5th ed (New York: Oxford University Press, 2009)Google Scholar.

⁴⁷ Although in certain circumstances contractual breaches by the state could also amount to IIA treaty breaches. These breaches are called breaches of the Umbrella Clause of the IIA.

⁴⁸ Schill, S.W., “International Investment Law and Comparative Public Law – An Introduction” in Schill, S.W., ed, International Investment Law and Comparative Public Law (Oxford: Oxford University Press, 2010) [Schill (2010)CrossRefGoogle Scholar]. Also see Salacuse (2010), supra note 3, 354-55.

⁴⁹ Metalclad Corporation v. United Mexican States (2000), 5 ICSID 236, ARB(AB)/97/1 (ICSID)Google Scholar; Methanex Corporation v. United States of America (2005), 44 ILM 1345 (UNCITRAL), online: <http://www.naftaclaims.com/disputes_us_6.htm>>Google Scholar.

⁵⁰ Eureko BVv. Republic of Poland (2005), ARB/97/3 (ICSID)Google Scholar.

⁵¹ MTD Equity Sdn. Bhd. and MTD Chile S^,A. v. Republic of Chile (2005), 44 ILM 91, ARB/01/7 (ICSID)Google Scholar.

⁵² Biwater Gauff (Tanzania) Ltd. v. Tanzania, ICSID Case No. ARB/05/22, Award (24 July 2008)Google Scholar.

⁵³ CMS Gas Transmission Co v. Argentina (2005), ARB/01/8 (ICSID)Google Scholar; CMS Gas Transmission Company v. Argentina (2007), ARB/01/8, (Annulment Proceedings) (ICSID)Google Scholar; Enron Corporation v. Argentina (2007), ARB/01/3 (ICSID)Google Scholar; Sempra Energy International v. Argentina (2007), ARB/02/16 (ICSID)Google Scholar; Sempra Energy International v. Argentina (2010), ARB/02/16, (Annulment Proceedings) (ICSID)Google Scholar; LG & E Energy Corporation v. Argentina (2006), ARB/02/1 (ICSID)Google Scholar; Continental Casualty Company v. Argentina (2008), ARB/03/9 (ICSID)Google Scholar.

⁵⁴ Occidental Exploration and Production Co v. Republic of Ecuador (2004), U.N.3467 (LCIA)Google Scholar.

⁵⁵ Dolzer and Schreuer (2008), supra note 3 at 7-8; Kaushal, A., “Revisiting History: How the Past Matters for the Present Backlash Against the Foreign Investment Regime” (2009) 50 Harv Int'l LJ 491 at 511-12Google Scholar.

⁵⁶ For more on this debate see Spears, S., “The Quest for Policy Space in New Generation of International Investment Agreements” (2010) 13 J Int'l Econ L 1037CrossRefGoogle Scholar.

⁵⁷ Salacuse (2010), supra note 3 at 355.

⁵⁸ Schill (2010), supra note 48.

⁵⁹ For more on the Argentine crisis see CMS v. Argentina, supra note 53; CMS v. Argentina, (Annulment Proceedings), supra note 53; Enron Corporation v. Argentina, supra note 53; Sempra Energy v. Argentina, supra note 53; Sempra Energy v. Argentina, (Annulment Proceedings), supra note 53; LG & E Energy v. Argentina, supra note 53; Continental Casualty v. Argentina, supra note 53.

⁶⁰ Here it is important to note that an investment treaty arbitral tribunal only awards damages to the foreign investors and does not recommend the removal of the illegal measure. However, once a measure is found illegal, the host country will, more often than not, remove the measure because continuing with a measure found illegal may result in more arbitral challenges by other foreign investors.

⁶¹ For more on this see Rubins, N., “The Allocation of Costs and Attorney's Fees in InvestorState Arbitration” (2003) 18 ICSID Foreign Investment LJ 109 at 125Google Scholar; Salacuse (2010), supra note 3 at 355-56.

⁶² For more on this point see Harten, G. Van, Investment Treaty Arbitration and Public Law (Oxford: Oxford University Press, 2007) [Van Harten (2007)]Google Scholar; Schill (2010), supra note 48; Schneidermann, D., Constitutionalizing Economic Globalisation (Cambridge: Cambridge University Press, 2008)Google Scholar; Montt, S., State Liability in Investment Treaty Arbitration (Oxford: Hart, 2009)Google Scholar.

⁶³ For more on this debate see Van Harten (2007), ibid.; Harten, G. Van & Loughlin, M., “Investment Treaty Arbitration as a Species of Global Administrative Law” (2006) 17 EJIL 121CrossRefGoogle Scholar.

⁶⁴ Ministry of Finance Compendium, supra note 1.

⁶⁵ Countries often adopt or develop model IIAs, which are policy statements providing the kind of provisions that a country wishes to have in an IIA. Countries often use their model IIAs as the basis of IIA negotiations. The Indian Model IIA is available at the website of the Ministry of Finance, India:

<http://finmin.nic.in/the_ministry/dept_eco_affairs/icsection/Indian%20Model%20Text%20BIPA.asp>.

⁶⁶ See Article 9(3)(a), Indian Model IIA.

⁶⁷ See Article 9(3)(c)(ii), Indian Model IIA.

⁶⁸ These 10 IIAs are with the following countries: Germany, Spain, Qatar, Morocco, Argentina, Kuwait, Portugal, Bosnia and Herzegovina, Macedonia and Syria.

⁶⁹ There are six IIAs that mention nothing on whether the ITA award shall be binding or not. These are with the following countries: Poland, Sri Lanka, Malaysia, Oman, Swiss Confederation and Tajikistan.

⁷⁰ These IIAs are with the following countries: Italy, Spain, Qatar, Austria, Morocco, Sweden, Argentina, Finland, Portugal, Slovak Republic, Hellenic Republic, Macedonia, Saudi Arabia, Turkey, Syria and Yugoslavia.

⁷¹ See generally Jathar, R.V., Evolution of panchayati raj in India (Bombay: Institute of Economic Research, 1964)Google Scholar; Shukla, L.P., A History of Village panchayats in India (Nasik, 1970)Google Scholar; Singh, V.P., “Legal Perceptions and Usages in North Indian Village Disputes” (1976) 19 J Soc Research 14Google Scholar.

⁷² Hayden, R.M., “Excommunication as Everyday Event and Ultimate Sanction: The Nature of 7S3uspension from an Indian Caste” (1993) 42(2) J Asian Stud 291Google Scholar.

⁷³ Recently, there have been instances of Khap Panchayats coming in conflict with the laws of the land on matters relating to inter-caste marriages, personal laws, etc. and have sought to impose their own sanctions, including death, on individuals for transgression of community norms. See Sangwan, Jagmati, “Khap panchayat: signs of desperation?”, The Hindu (7 May 2010) online: <http://beta.thehindu.com/opinion/lead/article424506.ece?homepage=true>Google Scholar.

⁷⁴ Mohta, V.A. & Mohta, A. V., Arbitration, Conciliation and Mediation, 2d ed (Noida: Manupatra, 2008) at 1–5Google Scholar.

⁷⁵ Bengal Regulation, 1772; Bengal Regulation 1781; Bengal Regulation 1787; Bengal Regulation, 1793.

⁷⁶ §§ 14-17, Arbitration Act 1940, Act No. 10 of 1940.

⁷⁷ AIR 1981 SC 2075.

⁷⁸ Indian Arbitration Act, § 5: ‘Extent of judicial intervention.- Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part’.

⁷⁹ See e.g. §§ 7, 8, etc., Indian Arbitration Act.

⁸⁰ Guru Nanak Foundation, supra note 77.

⁸¹ This may be contrasted with the approach of the Indian courts with respect to settlement of international disputes between India and other States (which could include treaty-based disputes). In Maganbhai Ishwarbhai Patel, 1969 AIR 783, the court held that the power of the executive in settlement of such disputes was free of judicial intervention. However, any governmental action to give effect to such a settlement can be challenged before an Indian court.

⁸² §§ 8, 9, 11, 27, 34, 37, Indian Arbitration Act.

⁸³ § 8, Indian Arbitration Act.

⁸⁴ § 9, Indian Arbitration Act.

⁸⁵ § 11, Indian Arbitration Act.

⁸⁶ § 14, Indian Arbitration Act.

⁸⁷ § 27, Indian Arbitration Act.

⁸⁸ § 34(2)(b)(ii), Indian Arbitration Act.

⁸⁹ § 36, Indian Arbitration Act.

⁹⁰ § 37, Indian Arbitration Act.

⁹¹ § 2(2), Indian Arbitration Act.

⁹² Kitchnology N. V. and Another v. Unicor Gmbh Rahn and Another, 1999(1) Arb LR 452 (Delhi)Google Scholar; Dominant Offset Pvt. Ltd. v. Adamovske Strojitrny A.S., AIR 2000 Del 254Google Scholar; East Coast Shipping Limited v. M.J. Scrap Pvt. Ltd, 1997(1) HN 444Google Scholar; Jindal Durga Ltd v. Noy Vallesina Engineering SpA., 2002(2) Arb LR 323Google Scholar; Cultor Food Science Inc. v. Nicholas Piramal India Ltd., 2001(6) ALT 706Google Scholar. Also see Jain (2010) supra note 13 at 266-71 for a detailed discussion on cases decided by different Indian High Courts.

⁹³ Bhatia International v. Bulk Trading S.A., AIR 2002 SC 1432.

⁹⁴ Emphasis added.

⁹⁵ Venture, supra note 12.

⁹⁶ Wadhwa, Anirudh & Krishnan, Anirudh, eds, Justice R.S. Bachawat's Law of Arbitration & Conciliation, 5th ed (Nagpur: LexisNexis Butterworths & Wadhwa, 2010) at 2236-39Google Scholar.

⁹⁷ Burrough, J. in Richardson v. Mellish (1824), 130 ER 294 at 303Google Scholar.

⁹⁸ Denning, Lord in Enderby Town Football Club Ltd v. Football Association Ltd, [1971] Ch 591 at 606Google Scholar.

⁹⁹ Redfern & Hunter, supra note 46.

¹⁰⁰ Renusagar v. General Electric, AIR 1994 SC 860Google Scholar; ONGC v. Saw Pipes, AIR 2003 SC 2629Google Scholar; Venture, supra note 12.

¹⁰¹ § 34(2)(b)(ii), Indian Arbitration Act.

¹⁰² Renusagar, supra note 100.

¹⁰³ Ibid.

¹⁰⁴ ONGC, supra note 100.

¹⁰⁵ The Court used the examples of the Transfer of Property Act and the Indian Contract Act and stated that it would be against the basic spirit of justice if an award violating these Acts could not be assailed.

¹⁰⁶ Venture, supra note 12.

¹⁰⁷ Saipem v. Bangladesh, Award of 30 June 2009, online: <https://ita.law.uvic.ca/about.htm>.

¹⁰⁸ Sattar (2010), supra note 13.

¹⁰⁹ Supra note 6.

¹¹⁰ Supra note 100.

¹¹¹ Renusagar, supra note 100 at para 61.

¹¹² Supra note 12.

¹¹³ This is not to argue that each complaint of the foreign investor alleging that the host state's regulatory measure has violated the IIA will result in the tribunal coming to such a conclusion. There have been quite a few cases where the ‘regulatory’ measures of the host state have been held legal by arbitral tribunals. However, in this paper, we are looking at those situations where the arbitral tribunal comes to the conclusion that the ‘regulatory’ measure of the host state has violated the concerned IIA.

¹¹⁴ CMS v. Argentina, supra note 53.

¹¹⁵ See para 281 of CMS v. Argentina, supra note 53.

¹¹⁶ See para 272 of CMS v. Argentina, supra note 53.

¹¹⁷ For a discussion on this case and other cases involving Argentina see Bjorklund, A., “Economic Security Defences in International Investment Law” (2009) 1 YB Int'l Investment L & Pol'y 479Google Scholar; Kurtz, J., “Adjudging the Exceptional at International Law: Security, Public Order and Financial Crisis” (2010) 59 ICLQ 325CrossRefGoogle Scholar; Alvarez, J. & Khamsi, K., “The Argentine Crisis and Foreign Investors” (2009) 1 YB Int'l Investment L & Pol'y 379Google Scholar.

¹¹⁸ Franck, S., “Empirically Evaluating Claims about Investment Treaty Arbitration” (2007) 86 NCL Rev 1 [Franck (2007)]Google Scholar.

¹¹⁹ Ceskoslovenska Obchodni Co v. Argentine Rep (29 December 2004), ARB/97/4 (Final Award) (ICSID)Google Scholar.

¹²⁰ CME Czech Republic BV v. Czech Republic (14 March 2003), (Final Award) (UNCITRAL)Google Scholar.

¹²¹ Franck (2007), supra note 118.

¹²² Int'l Thunderbird Gaming Corp v. United Mexican States (26 January 2006), (Arbitral Award) (NAFTA Chapter 11 Arb Trib) 68, 72Google Scholar.

¹²³ For more on the point of compliance see Ryan, C.M., “Discerning the Compliance Calculus: Why States Comply with International Investment Law” (2009) 38 Ga J Int'l & Comp L 63Google Scholar.

¹²⁴ For more on the Realist School see TDunne, . & Schmidt, B.C., “Realism” in Baylis, J. & Smith, S., eds, The Globalization of World Politics, 3d ed (Oxford: Oxford University Press, 2006) 161-83Google Scholar.

¹²⁵ For more discussion on this see Hirsch, M., “Compliance with Investment Treaties: When are States more likely to Breach or Comply with Investment Treaties?” in Christina, B.et al, eds, International Investment Law for the 21^st Century (Oxford: Oxford University Press, 2009) 865-76CrossRefGoogle Scholar.

¹²⁶ Waibel, M., “BIT by BIT – The Silent Liberalization of the Capital Account” in Reinisch, A., ed, International Investment Law for the 21^st Century – Essays in the Honour of Christoph Schreuer (New York: Oxford University Press, 2009) 497–518 [Waibel (2009)]CrossRefGoogle Scholar; Salacuse (2010), supra note 3; Kolo, A. & Walde, T., “Capital Transfer Restrictions under Modern Investment Treaties” in Reinisch, A., ed, Standards of Investment Protection (Oxford: Oxford University Press, 2008) 205 [Kolo and Walde (2008)]CrossRefGoogle Scholar; UNCTAD, Transfer of Funds (New York and Geneva: UN, 2000) [UNCTAD (2000)]Google ScholarPubMed; Dolzer and Schreuer (2008), supra note 3; Gallagher, K. P., “Policy Space to Prevent and Mitigate Financial Crisis in Trade and Investment Agreements” G 24 Discussion Paper Series, No 58, (UNCTAD, 2010)Google Scholar; Turyn, A. & Aznar, F.P., “Drawing the Limits of Free Transfer Provisions” in Waibel, M.et al, eds, The Backlash against Investment Arbitration (The Hague: Kluwer, 2010) 51–78 [Turyn and Aznar (2010)]Google Scholar; Muchlinski, P.T., “The Framework of Investment Protection – The Content of BITs” in Sauvant, K.P. & Sachs, L.E., eds, The Effect of Treaties on Foreign Direct Investment, Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows (Oxford: Oxford University Press, 2009) 37 at 59–61 [Muchlinski (2009)]Google Scholar.

¹²⁷ For more on this see Gururaj, B.N.et al, Commentaries on FEMA, 2d ed (Delhi: LexisNexis, 2009)Google Scholar.

¹²⁸ See §§ 6(3)(a)-(j), Foreign Exchange Management Act, 1999, Act 42 of 1999 [FEMA]Google Scholar.

¹²⁹ The issue of compatibility between MTPs in IIAs (pre-accession BITs) and other regulations (EU Treaty or the EC law) has also arisen in EU; see Commission of EU v. Republic of Austria, C- 205/06, available at <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62006J0205:EN:HTML> (last visited on 2 October 2010); Commission of EU v. Kingdom of Spain, C-249/06, available at <http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:62006J0249:EN:HTML> (last visited on 2 October 2010).

¹³⁰ For more on transfer of funds provision in IIAs, see Waibel (2009), supra note 126 at 497-518; Salacuse (2010), supra note 3; Kolo and Walde (2008), supra note 126 at 205; UNCTAD (2000), supra note 126; Dolzer and Schreuer (2008), supra note 3 at 010; Turyn and Aznar (2010), supra note 126 at 51-78; Muchlinski (2009), supra note 126 at 59-61.

¹³¹ In this regard, it is important to note that the majority of Indian IIAs have a provision saying that foreign investments shall be governed by domestic laws. Such provisions make the obvious point that the day to day operations of foreign investments will be in accordance with domestic laws. In the above situation, can India rely on this provision to argue that its regulatory measure, which is consistent with FEMA, is IIA compatible notwithstanding the violation of the unqualified right to transfer funds? The answer to this question is no because such an interpretation will allow domestic law to be used to justify violation of international law rendering the IIA provisions inutile. In any case, a situation where the treaty obligations and national law appear to be in conflict is uncalled for and will give rise to all sorts of complexities, which India should have avoided by being more precise and definite in drafting the MTPs in its IIAs including the Model IIA.

¹³² Ministry of Law (2010), supra note 15.

¹³³ Statement of Objects and Reasons, The Arbitration & Conciliation (Amendment) Bill, 2003Google Scholar; Ministry of Law (2010) supra note 15.

¹³⁴ Bhatia, supra note 93.

¹³⁵ It is pertinent to note that though the Amendment Bill as it currently stands does not add the word ‘only’ to section 2(2), there is a mention in the Consultation Paper, issued in this regard, of such an addition. If this addition were to take effect, Part I will cease to have application to arbitrations held outside India including investment arbitrations.

¹³⁶ See the discussion in Section V.A.2 of this paper.