Key Takeaways
- The Federal Cabinet has constituted a committee to review Pakistan’s bilateral investment treaty (BIT) framework.
- The committee will prepare a draft BIT Policy in line with the evolving global economic context.
- The committee will examine the outcomes of terminated BITs and determine their relevance.
The Federal Cabinet of Pakistan has taken a significant step towards modernizing its investment policies by forming a committee to review the country’s bilateral investment treaty (BIT) framework. The committee, known as the Committee on Bilateral Investment Treaties, has been established under Rule 17(3) of the Rules of Business, 1973.
The committee will be headed by the Minister for Commerce and will include representatives from various government departments, including the Minister for Economic Affairs, Secretary Foreign Affairs Division, Secretary Commerce Division, Secretary Law and Justice Division, Director General Special Investment Facilitation Council (SIFC), a representative of the Attorney General for Pakistan, and Secretary Board of Investment (BoI), who will serve as the secretary.
The committee’s primary task is to examine the reasons and approval process followed by the Board of Investment for issuing the notice of termination of the Bilateral Investment Treaty between Pakistan and Sweden, signed in 1981. It will also formulate guidelines for future termination notices.
Additionally, the committee will review the outcomes of the termination of BITs with 25 countries under Pakistan’s BIT Strategy 2021 and determine whether the strategy and Pakistan Model Bilateral Investment Treaty Template, 2021, remain relevant in the current international economic environment.
The committee will also prepare a draft BIT Policy for Pakistan, covering investment protection provisions, Most Favoured Nation (MFN) criteria, Fair and Equitable Treatment (FET) standards, and dispute resolution mechanisms. The report is expected to be submitted to the Cabinet within the current month.
This move follows the Cabinet’s decision to revoke Pakistan’s notice of termination of its BIT with Sweden before it takes effect on September 28, 2026, and initiate renegotiations of the existing agreement to modernize its provisions in line with Pakistan’s current investment protection framework and policy objectives.
According to the BoI, many first-generation BITs, negotiated mainly during the 1990s and early 2000s, contained broad and ambiguously worded investment protection provisions, including wide-ranging MFN clauses, unqualified FET standards, and expansive Investor-State Dispute Settlement (ISDS) mechanisms. These provisions exposed Pakistan to significant risks and costly international investment arbitration.
The formation of the committee is part of a broader effort to address these risks and ensure that future BITs are more aligned with Pakistan’s current economic and policy objectives. The committee will also consider the implications of the termination of BITs with 25 countries and the ongoing renegotiations with other countries.
