Investor-State Dispute Settlement (ISDS) Mechanism

Investor-State Dispute Settlement mechanism is a system which allows individual companies to sue countries for their discriminatory practices. The practice came to light through the Philip Morris v. Uruguay Case under WTO.

  • It is an instrument of public international law whose provisions are defined by a number of bilateral investment treaties.
  • ISDS is also associated with International Arbitration under the rules of International Centre for Settlement of Investment Disputes of the World Bank.
India’s stance

India along with some other nations rejected an informal proposal made by Canada and EU to make a multilateral pact on investments at the World Trade Organisation with ISDS mechanism built into it. India rejected it due to following reasons:

  • It wanted it to be a part of a bilateral agreement and not a multilateral agreement.
  • India stands for solving all the issues in its own courts before taking them to international courts.

EU stated that it will only hold free trade talks with India only after conclusion of a new bilateral investment treaty (BIT) with India.

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