India’s New Bilateral Investment Promotion and Protection Treaty with Nepal: A New Trend in State Practice
- ↵1 Professor of International Law, University of Leeds, England. Vice-President of the Asian Society of International Law and Associate Member of the Institut de Droit International. E-mail: s.p.subedi{at}leeds.ac.uk.
Abstract
India is the largest source of foreign investment in Nepal and its largest trading partner. Owing to the internal political problems in Nepal and harassment of some Indian businesses by the Maoist rebels during the Maoist insurgency in 1996–2006, India sought to conclude a bilateral investment protection treaty with Nepal in order to ensure a higher level of protection for Indian investors in Nepal than currently existed. For its part, Nepal also realized that such a treaty would instil confidence in Indian businesses and thus encourage more to invest in Nepal. With this mutuality of interests in mind, India and Nepal signed a new Bilateral Investment Promotion and Protection Agreement in 2011. Many of its provisions represent a new trend in State practice with regard to the conclusion of bilateral investment treaties, including a flexible and innovative international mechanism for resolution of investment disputes. Therefore, the India-Nepal treaty is of significance in the evolution of international investment law. The author concludes that it would be helpful in instilling confidence in foreign investors to invest in a least-developed country with its internal political problems, and in assuring that their investment will be safe regardless of the internal politics or public posturing by politicians to win votes.
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