Law Commission Recommendations on BIT:

♤ A modification from a highly narrow ‘enterprise-based definition’ of investment to a broader and universally accepted ‘asset-based definition’. An enterprise-based definition would mean that a foreign investor who did not set up an enterprise in India to carry on business would have absolutely no protection.

♤ MFN must not be incorporated since India might chose to provide differential benefits to trading partners based on the extent of incoming investment from a country.

♤ LCI suggests amendments to certain provisions of the dispute resolution mechanism contained in the Model Draft.

♤ The Model Draft contained general exceptions with a long list of permissible objectives such as public health, environment, public order, public morals, improving working conditions, ensuring the integrity and stability of the financial system, banks and financial institutions etc., and it provided that any measures which the state considered to be in furtherance of the above objectives would not be subject to scrutiny before an arbitral tribunal.