The Best of Two Worlds? The Brazil-India Investment Treaty

By Martin Dietrich Brauch | Guest Blog | March 30, 2020

Two innovative investment treaty models developed by major emerging economies came to light in 2015 when Brazil concluded its first Cooperation and Facilitation Investment Agreements (CFIAs, or ACFIs, in its Portuguese-language abbreviation)[1] and India approved its revised model BIT.[2] Since then, both models have been influential in the global debate about options for reforming international investment law for sustainable development.[3] The year 2020 begins with a long-anticipated[4] marriage between the two: on January 25, Brazil and India concluded their Investment Cooperation and Facilitation Treaty (ICFT).[5] This piece provides a preliminary overview of the structure and provisions of the treaty, outlining which elements of the Brazilian approach and of the Indian model it incorporates.

Preamble and Part I (Scope and Definitions)

Preamble: Repeating language from the Indian model BIT, the preamble of the ICFT sets high hopes for the cooperation in and facilitation of investments, which, according to the text, “will” be conducive to business activity, economic cooperation and sustainable development. This language is more assertive than that used in other treaties concluded by Brazil—for example, “recognizing the essential role of investment in promoting sustainable development,”[6] and is quite optimistic given the difficulty of establishing any link between investment treaties and FDI flows.[7] Even so, the preamble importantly and positively reaffirms “the right of Parties to regulate investments in their territory in accordance with their law and policy objectives.”

Objective: The stated objective of the treaty is “to promote cooperation between the Parties in order to facilitate and encourage bilateral investments” (Art. 1). Like other treaties concluded by Brazil since 2015, the ICFT sets out to achieve this objective not through investment protection and ISDS, but through an institutional framework to manage an investment cooperation and facilitation agenda, as well as risk mitigation and dispute prevention mechanisms.

Definition of investment: In line with the Brazilian and Indian models, the ICFT adopts an enterprise-based definition of investment. To be covered by the treaty, the investment must be subject to direct or indirect ownership or control or—a criterion used in recent Brazilian treaties—“a significant degree of influence” by an investor of the other state party. It must also have “the characteristics of an investment, including the commitment of capital, the objective of establishing a lasting interest, the expectation of gain or profit and the assumption of risk” (Art. 2.4).

Building on both models, the definition of investment also includes a comprehensive list of exclusions, covering orders or judgements in judicial, administrative or arbitral proceedings; debt securities; expenditures incurred prior to obtaining necessary licences; portfolio investments; and intangible rights such as goodwill, brand value and market share (Art. 2.4.1).

Definition of investor: Investors may be natural persons (nationals, citizens or permanent residents) or enterprises (other than branches). Enterprises must be organized in accordance with the law of their home state and have substantial business activities in the territory of that state (Arts. 2.5 and 2.8).

Scope: The ICFT will apply to measures (including laws, regulations, decisions and others) relating to existing investments and those established, acquired or expanded after its entry into force, provided that they are admitted in accordance with host state law (Art. 3.1). The article on scope expressly excludes the application of the treaty to any pre-investment activity (Art. 3.5), that is, those undertaken prior to the establishment of the investment, including those undertaken to comply with “sectorial limitations on foreign equity, and other specific limits and conditions applicable under any law relating to the admission of investments in the territory of the Party” (Art. 2.10). Local government measures, laws or measures regarding taxation and government procurement, among others, are also excluded from the scope of application of the treaty (Art. 3.6).

Part II (General Obligations of the Parties): Investment protection provisions

Standard of treatment: Like the Indian model and the post-2015 treaties concluded by Brazil, there is no reference to the “fair and equitable” standard. Instead, the ICFT includes a provision on the treatment of investments (Art. 4.1), “based on the applicable rules and customs of international law as recognized by each of the Parties and their respective national law,” which prohibits the parties from subjecting investments to a closed list of breaches: denial of justice in judicial or administrative proceedings; fundamental breach of due process; targeted discrimination; or manifestly abusive treatment. In addition to these four types of conduct, which appear in the Indian model, the closed list of breaches in the ICFT also includes “discrimination in matters of law enforcement, including the provision of physical security.” This had appeared, with slightly different wording, in some other treaties recently concluded by Brazil that also adopted an Indian-style exhaustive list of breaches.[8]

National treatment: Foreign investors and investments are also promised national treatment in like circumstances (Art. 5.1). A clarification is included that “like circumstances” depends on the totality of circumstances, “including whether the relevant treatment distinguishes between investors or investments on the basis of legitimate public welfare or regulatory objectives” (Art. 5.2). Also building on recent treaties concluded by Brazil, a clarification is included that national treatment does not oblige a party “to compensate for inherent competitive disadvantages which result from the foreign character of the investors and their investments” (Art. 5.3).

MFN: In line with India’s strong opposition to the MFN clause in investment treaties, as a result of the country’s negative experience with the White Industries case,[9] the ICFT does not include one, even though it is a prominent feature in all other treaties concluded by Brazil since 2015.

Expropriation: The ICFT prohibits direct expropriation by either party, except where implemented for reasons of public purpose, in a non-discriminatory manner, on payment of effective and adequate compensation, and in accordance with due process of law (Art. 6.1). Indirect expropriation, as is the case with all other Brazilian treaties post-2015, is explicitly excluded (Art. 6.3). Even so, the treaty replicates from the Indian model the clarification that “non-discriminatory regulatory measures…designed and applied to protect legitimate public interest or public purpose objectives…shall not constitute expropriation” (Art. 6.4).

Transparency: Following both the Brazilian and the Indian models, the ICFT contains a provision requiring each party to publish laws, regulations and other materials pertinent to matters covered by the treaty in electronic format, as well as to publish proposed measures and to provide interested persons and the other party a reasonable opportunity to comment on them. Both obligations, however, are subject to the party’s respective domestic laws (Art. 8).

Transfers: The ICFT contains an article on the freedom of transfers (Art. 9). In line with both the Brazilian and the Indian models as well as other new-generation IIA models, the provision safeguards the right of parties to adopt temporary and non-discriminatory regulatory measures in the event of a balance-of-payments crisis (Art. 9.2–3). It also allows parties to prevent transfers through the application of their laws on bankruptcy, compliance with judgements and awards, compliance with labour obligations, among others (Art. 9.4).

Anti-corruption: Mirroring other recent treaties concluded by Brazil, the ICFT commits the parties to “adopt measures and make efforts to prevent and fight corruption, money laundering and terrorism financing…in accordance with its laws and regulations” (Art. 10.1). It also clarifies that the ICFT does not require the parties to protect investments made with capital or assets of illicit origin, or established or operated through illegal acts subject to asset forfeiture under domestic law (Art. 10.2). In addition to this article in Part II (on state obligations), anti-corruption is also addressed in Part III (on investor obligations).

Part III (Investor Obligations or Responsibilities)

Compliance with laws: The first of two articles in Part III (Art. 11) replicates the text of an article of the Indian model BIT (also Art. 11). It imposes a binding obligation on investors and investments to comply with all investment-relevant laws, including those on taxation, prohibits them from bribing public officials and commits them to providing all information required by the state parties.

CSR: In turn, the other article in Part III (Art. 12, Corporate Social Responsibility) closely follows the approach and language on CSR adopted by Brazil in its other post-2015 treaties. First, the article creates a best-efforts obligation on investors and investments to “strive to achieve the highest possible level of contribution to the sustainable development of the Host State and the local community, through the adoption of a high degree of socially responsible practices, based on the voluntary principles and standards set out in this Article and internal policies, such as statements of principle that have been endorsed or are supported by the Parties” (Art. 12.1). Unlike other Brazilian treaties, the ICFT does not mention any specific sets of standards, such as the OECD Guidelines on Multinational Enterprises. The list of voluntary principles and standards for responsible business conduct resembles the lists seen in previous treaties negotiated by Brazil and covers elements including sustainable development, human rights, local capacity building, creation of human capital, good corporate governance and non-discrimination among employees (Art. 12.2).

Part IV (Institutional Governance, Dispute Prevention and Settlement)

Joint Committee and National Focal Points: The ICFT creates a Joint Committee composed of government representatives of both state parties to oversee the implementation of the agreement (Art. 13) and to develop and discuss an Agenda for Further Investment Cooperation and Facilitation (Art. 25). Each state also commits to designating a National Focal Point (or Ombudsperson) to support investors of the other state party. In Brazil’s case, as in similar agreements, the focal point will be the Executive Secretariat of the Foreign Trade Board (CAMEX) (Art. 14.2), while India will establish its own within the Department of Economic Affairs in the Ministry of Finance (Art. 14.3). The functions and responsibilities of these treaty bodies mirror those of the treaty bodies established under the very first agreements concluded by Brazil pursuant to this model.[10]The ICFT also requires the parties to share—particularly through these treaty bodies—information concerning business opportunities, incentives, legal frameworks, customs procedures, tax regimes and other investment-related matters (Art. 15). While the obligations are binding (“[t]he Parties shall exchange information…” and “the Party shall provide, when requested, in a timely fashion, information…”), they are not listed as matters that a state–state dispute settlement tribunal may examine (Art. 19.3).

Dispute Prevention Procedure: Also following the 2015 Brazilian model, the ICFT includes a state–state procedure designed to prevent investment-related disputes (Art. 18). When one of the state parties considers that the other state adopted a measure in breach of the ICFT, the first state submits a written request to the Joint Committee, along with the underlying finding of fact and law. The Joint Committee then meets within 90 days from the date of the request, and within 120 days from that meeting (extendable by mutual agreement), evaluates the submission and prepares a report with its findings, aimed at resolving the dispute—or preventing its escalation. (All proceedings and documents are confidential, except for the report.) Only if the Joint Committee fails to resolve the dispute, either of the parties may submit it to state–state arbitration.

Disputes between Parties: Deviating from the Indian model BIT, the ICFT does not include an ISDS provision. ISDS is known to be a no-go for Brazil, which has provided for state–state arbitration only in all of its ACFIs. While the ICFT is no exception, it evidences the evolution of Brazil’s ACFIs. In the very first ACFI, concluded by Brazil with Mozambique in 2015, there was merely a reference to the possibility of the parties resorting to state–state arbitration should the Joint Committee procedure fail to resolve the dispute.

In turn, the ICFT contains a detailed provision on state–state arbitration (Art. 19). The parties may submit the dispute to ad hoc arbitration or to a permanent arbitration institution, and the purpose of the arbitration is to decide on the interpretation of or compliance with the treaty; the IFCT expressly excludes the possibility of a compensation award (Art. 19.2). The arbitral tribunal has jurisdiction only over matters pertaining to Part I (scope and definition), Part II (general obligations of the parties, with some exceptions), Article 16 (treatment of protected information), Article 21 (prudential measures) and Part VII (the final provisions) of the treaty. The state–state tribunal has no jurisdiction over the transparency (Art. 8) and anti-corruption (Art. 10.1) obligations, the investor obligations and responsibilities (namely, compliance with domestic laws and CSR) and the institutional governance provisions, including the information-sharing obligations (Art. 15).

Each state has the right to appoint one tribunal member, and the two members appoint a third-state national as chairperson of the tribunal; the President of the International Court of Justice may be invited to make any necessary appointments (Art. 19.4–5).

Notably, the ICFT requires arbitrators to have experience in public international law, international investment or trade law, or resolution of investment disputes; to be independent of either state; and to comply with a code of conduct included in Annex II to the treaty. The code of conduct deals with matters including the disclosure of circumstances that may raise questions regarding the arbitrators’ independence, impartiality or freedom from conflicts of interest, and sets rules for challenges and replacements of arbitrators. It also includes a non-exhaustive list of circumstances under which a “justifiable doubt as to an arbitrator’s independence or impartiality or freedom from conflict of interest shall be deemed to exist” (Annex II, para. 10).

A decision of the tribunal is binding on the parties (Art. 19.7). Although arbitration costs are to be shared between the parties, and each party must bear its own legal costs, the tribunal has the discretion to “direct that the entire costs or a higher proportion of costs shall be borne by one of the two disputing Parties” (Art. 19.8).

Part V (Exceptions)

Like other treaties concluded by Brazil, the ICFT includes specific exceptions regarding tax measures (Art. 20), prudential measures relating to the financial system (Art. 21) and measures to ensure that investment activity is undertaken in accordance with labour, environmental and health laws of the host state, as well as a provision forbidding the lowering of standards in those areas (Art. 22).

In addition, closely following the Indian model BIT, the ICFT includes a general exceptions provision covering measures to protect public morals or maintain public order; protect human animal or plant life or health; protect and conserve the environment; among others (Art. 23), and a provision to safeguard parties’ essential security interests (Art. 24), further detailed in an annex (Annex I).

Summary of the main features

Courtesy of two emerging economies, the 2020 Brazil–India ICFT brings to the IIA world a blend of two of the most innovative investment treaty models developed in recent years:

  • Building on both the Brazilian and the Indian approaches, the ICFT features an enterprise-based definition of investment, with exclusions aimed at clarifying the types of foreign investment that the state parties intend to facilitate and encourage.
  • The ICFT’s focus is on investment facilitation, following the Brazilian model, but its limited investment protection provisions again combine the two approaches. MFN is excluded, in line with the Indian model. Only direct expropriation is covered (and not indirect expropriation), in accordance with the Brazilian approach. The term “fair and equitable” is avoided, in line with both models. Instead, a provision on “treatment of investments” is included, reflecting the closed-list approach of the Indian model, which Brazil had also incorporated into and built on in some of its other recently concluded treaties.
  • In some respects, the sum of approaches results in a sum of texts: India brings its language on investors’ obligation to comply with domestic laws; Brazil brings its provision on CSR. Some exceptions articles come from Brazil (on tax measures; prudential measures; and labour, environmental and health measures), followed by others that come from India (on general exceptions and essential security interests).
  • Finally, the dispute prevention and settlement provisions are Brazilian-style, based on the (still untested) preventive procedure before the Joint Committee and on the possibility of state–state arbitration only. Here, the ISDS mechanism of the Indian model stood no chance against Brazil’s resolve not to negotiate treaties providing for investor–state arbitration.


[1] Most of the investment agreements concluded by Brazil since 2015 are available at For earlier commentary on Brazil’s CFIAs, see, for example: Morosini, F., & Sanchez Badin, M. R. (2015, August). The Brazilian agreement on cooperation and facilitation of investments (ACFI): A new formula for international investment agreements? Investment Treaty News6(3), 3–5.; Bernasconi-Osterwalder, N., & Brauch, M. D. (2015, September). Comparative commentary to Brazil’s cooperation and investment facilitation agreements (CIFAs) with Mozambique, Angola, Mexico, and Malawi; and Martins, J. H. V. (2017). Brazil’s cooperation and facilitation investment agreements (CFIA) and recent developments. Investment Treaty News8(2), 10–12.

[2] Government of India. (2015). Model text for the Indian bilateral investment treaty The only publicly available text of a post-2015 treaty concluded by India prior to the Brazil–India ICFT is that of the 2018 Belarus–India BIT. See Treaty Between the Republic of Belarus and the Republic of India on Investments, September 24, 2018.—india-bit-2018-.

[3] According to UNCTAD’s analysis, the treaties concluded by Brazil and by India in 2018—building on their respective 2015 model treaties—include many provisions geared toward sustainable development-oriented reform of IIAs. United Nations Conference on Trade and Development (UNCTAD). (2019, June). Taking stock of IIA reform: Recent developments. IIA Issues Note3

[4] Investment Treaty News (ITN). (2016, December). Brazil and India initial bilateral investment treaty (BIT); text yet to be published

[5] Throughout this article, parenthetical references to articles refer to: Investment Cooperation and Facilitation Treaty Between the Federative Republic of Brazil and the Republic of India, January 25, 2020.

[6] Cooperation and Facilitation Investment Agreement Between the Federative Republic of Brazil and the United Arab Emirates, March 15, 2019.—united-arab-emirates-bit-2019- [hereafter 2019 Brazil–UAE CFIA].

[7] See Pohl, J. (2018). Societal benefits and costs of international investment agreements: A critical review of aspects and available empirical evidence. OECD Working Papers on International Investment, No. 2018/01.  OECD Publishing.; Bonnitcha, J. (2017, September). Assessing the impacts of investment treaties: Overview of the evidence. IISD.

[8] Cooperation and Investment Facilitation Agreement Between the Federative Republic of Brazil and the Republic of Guyana, December 13, 2018, Art. 4(1).—guyana-bit-2018-; 2019 Brazil–UAE CFIA, supra note 6, Art. 4(2).

[9] White Industries v. India, Final Award, November 30, 2011. See also Ranjan, P. (2012, April). The White Industries arbitration: Implications for India’s investment treaty program. Investment Treaty News2(3), 13–14.

[10] See supra, note 1.

Martin Dietrich Brauch is a Senior Legal and Economics Researcher at the Columbia Center on Sustainable Investment (CCSI). This article was reprinted with permission from IISD, originally published in IISD’s Investment Treaty News.

Image courtesy of