Context: Sri Lanka’s pullout from the Colombo port deal calls for rethinking India’s approach towards Bilateral Investment Treaties (BITs).
Concept of legitimate expectations:
In a case known as International Thunderbird Gaming Corporation v Mexico, it was held that the concept of legitimate expectations relates to a situation where the host state’s conduct creates reasonable and justifiable expectations on the part of an investor (or investment) to act in reliance on said conduct, such that a failure to honour those expectations could cause the investor (or investment) to suffer damages.
India-Sri Lanka BIT
Issues with India’s BIT with SriLanka: India had unilaterally terminated the BIT in 2017, following a protectionist policy as a result of several ISDS claims being brought against it.
Way forward: