India , UAE set to ink a BIPA

The government will finally sign a Bilateral Investment Protection Agreement (BIPA) with the UAE next week, signalling an end to its freeze on signing such pacts after its several run-ins with foreign companies, including Vodafone, over investment issues. Earlier this year, in January, the government had decided to put all discussions over BIPA with foreign countries on hold.
The government said it was going to work on a new model for BIPA before signing the agreement with any country. India has already inked BIPA with over 80 countries.
Sources confirmed that the agreement with the UAE will be signed under the new model here in the presence of UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan on December 12. “The template has just been cleared by both sides and it will be signed next week,’’ said a source.
With the government mulling a new template for BIPA, the first casualty in bilateral relations with the UAE was PM Manmohan Singh’s much-awaited visit to the country in March. The trip had to be called off at the last moment as the UAE insisted on signing BIPA during the visit.
On April 23, Jet Airways and UAE’s Etihad Airways signed a $8-billion agreement under which Etihad would be investing $379 million in Jet Airways for a 24% stake in the airlines. The UAE had earlier insisted that signing BIPA was imperative for the deal.
A notice to UAE telecom major Etisalat for alleged violations of foreign exchange laws also seemed to have irked the UAE, a country with which India’s annual trade volume reached $74 billion in 2012-13. Etisalat had been forced to shut its India operations after the Supreme Court cancelled 122 telecom licences, a fallout of the 2G scam case, in 2012.
The government had decided to review the earlier model “in the light of arbitration notices received under different BIPAs”. Vodafone had invoked India-the Netherlands BIPA in the tax dispute case as it threatened international arbitration over the issue.
As reported by media earlier, department of economic affairs (DEA) said in an official communication that “pending review of the model text, all BIPA negotiations have been kept on hold’’.

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