Pakistan and Australia Move Closer to Investment Deal

Pakistan and Australia have made significant progress on a proposed Bilateral Investment Treaty (BIT) aimed at promoting mutual investment flows while safeguarding the regulatory autonomy of both nations. According to sources, the two countries concluded a two-day virtual round of technical negotiations on Thursday, focusing on finalizing the core provisions of the treaty. The draft text, which remains confidential and under joint review, is still subject to further negotiations and formal approval by both governments. Once finalized, the treaty is expected to provide a comprehensive legal framework to facilitate and protect foreign direct investment (FDI) between Pakistan and Australia. It outlines key principles, including fair and equitable treatment, protection against unlawful expropriation, and the free transfer of funds, while also highlighting commitments to sustainable development, transparency, and corporate social responsibility. Key Provisions of the Draft Treaty include the Right to Regulate. Both parties reaffirm their sovereign right to regulate in areas of public interest, including health, environmental protection, and social welfare, ensuring policy space remains protected. Expropriation and Compensation: The draft ensures that investments cannot be expropriated except under lawful conditions and mandates adequate, prompt, and fair compensation in such cases. Investors will be permitted to repatriate profits, capital, and other returns in freely usable currency. This right will be subject to limited exceptions under national laws to ensure financial stability. The treaty includes provisions requiring investors to comply with anti-corruption laws, environmental standards, and social accountability norms. A multi-tiered dispute settlement system is proposed, beginning with consultations through a Joint Committee, followed by the exhaustion of local remedies, and finally, international arbitration if necessary. The treaty text also reflects both countries’ commitment to international standards, referencing the UN Sustainable Development Goals (SDGs), the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. Sources familiar with the discussions emphasized that while the draft represents major progress, it remains a working document subject to legal review, amendments, and approval by relevant ministries and stakeholders in both countries.