BIT (Bilateral Investment Treaty): Notes for UPSC Exam

A 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. The concept is in the news from time to time.

The details gathered from this article will be of immense use to the candidates writing the IAS Exam this year.

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Nature of Bilateral Investment Treaty

Most BITs grant investments made by an investor of one Contracting State in the territory of the other a number of guarantees, which typically include fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security

This type of investment is called Foreign Direct Investment (FDI). BITs are established through trade pacts. A nineteenth-century forerunner of the BIT is the friendship, commerce, and navigation treaty (FCN). Most BITs grant investments made by an investor of one Contracting State in the territory of the other a number of guarantees, which typically include fair and equitable treatment, protection from expropriation, free transfer of means and full protection and security.

Read about the Bilateral Investment Promotion and Protection Agreements (BIPA) at the linked article.

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BIT:- Download PDF Here

Frequently asked Questions about Bilateral Investment Treaty

Why have Bilateral Investment Treaties come under criticism?

Many NGOs have spoken against the use of BITs, stating that they are mostly designed to protect the foreign investors and do not take into account obligations and standards to protect the environment, labour rights, social provisions or natural resources. Moreover, when such clauses are agreed upon the formulation is legally very open-ended and unpredictable.

How do BIT’s function?

Bilateral investment treaty. A 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 type of investment is called foreign direct investment (FDI). BITs are established through trade pacts.

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