The ‘object and purpose' of Indian international investment agreements

In recent times, a number of Investor-State Arbitration (ISA) disputes have emerged between foreign investors and host states involving a wide array of host states’ sovereign regulatory measures such as environmental policy, ¹ privatization policy, ² urban policy, ³ measures to protect water services, ⁴ monetary policy, ⁵ taxation ⁶ and many others (Dolzer and Schreuer 2008: 7–8; Kaushal 2009: 511–12). This is not to suggest that in each such dispute regulatory measures have been found violating the International Investment Agreement (IIA). ⁷ In fact, limited empirical work done in this area shows that that the number of cases decided in favour of host countries are more than cases decided in favour of foreign investors (Franck 2007), and that statistically there is no evidence to show that the outcome of the ISA cases is dependent on the development status of the respondent state or the presiding arbitrator (Franck 2009). However, inconsistent legal conclusions and reasoning of arbitral tribunals (Spears 2010), ⁸ adjudication of such wide range of sovereign regulatory measures by ISA tribunals and award of substantive damages to foreign investors in some high-profile cases ⁹ have generated an intense debate about limits to regulatory power of the host state to adopt measures for pursuing non-investment objectives due to their IIA obligations, ¹⁰ in both the developing and developed world. For example, South Africa is reviewing its entire IIA programme, ¹¹ Bolivia and Ecuador gave up their membership of the International Centre for the Settlement of Investment Disputes (ICSID), ¹² the Russian Federation decided to terminate the provisional application of the Energy Charter Treaty in July 2009 (Salacuse 2010: 470), the United States and Canada adopted new model IIAs. ¹³