India’s ban on Chinese apps: Could India face the fire of Investment Treaty Claims?

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Authors: Atisha Sisodiya* and Smriti Shandil**

Intellectual Property
Investment Disputes
National Legislation


In response to geopolitical tensions between India and China, the Indian Ministry of Electronics and Information Technology released a Press Note[1] on June 29, 2020, banning 59 applications owned or controlled by Chinese entities for being “prejudicial to sovereignty and integrity of India, defense of India, security of state and public order”. Subsequently, on July 24, the Indian Government blocked additional 47 applications[2] that were reportedly clones or lite versions of the previous applications that had been subject to a ban. Most recently, on September 2, 2020, the Indian Government banned 118 Chinese applications including popular gaming application PUBG, after fresh tensions between the two countries at the border area in Eastern Ladakh.[3] These actions have come under heavy scrutiny, as they have resulted in limitations on Chinese investors in India’s technology sector, interference in contractual relations and unpredicted disruption in businesses, which are all likely to have an impact on the investment relationship between the two countries that was envisaged under the India-China Bilateral Investment Treaty (‘BIT’)[4], which came into force in 2007.


A BIT empowers foreign investors to directly bring claims against the host State before an international arbitration tribunal in case of a dispute, which is known as the Investor-State Dispute Settlement (ISDS). India had unilaterally terminated a number of investment treaties in 2018, including the BIT with China on October 3, 2018, however, the treaty continues to bind the countries due to the “survival or sunset clause” contained in Article 16(2) of the India-China BIT which provides that the treaty ‘shall continue to be effective for a further period of fifteen years from the date of its termination in respect of investments made or acquired before the date of termination of this Agreement.’ Thus, by virtue of the 15-year sunset clause, the Chinese investments still enjoy protection under the BIT and there exists a potential claim for a Chinese entity to bring an ISDS claim against the Indian government. This would also include Chinese investments made in India through other countries under different ownership structures. Although one could always argue that the BIT doesn’t expressly label websites or apps as ‘investments’, it is pertinent to note that the definition of investments under the BIT is broad enough to encompass Chinese apps.[5] The treaty expressly labels intellectual property rights (IPR) as investments,[6] which gives some scope of protection to websites or applications. The source code and user interface of a mobile application would constitute as an IPR granted protection under the treaty. Similarly, a website domain name would constitute as a trademark, which is also an IPR, and hence granted protection. Another way of encompassing applications as investments under the treaty would be through the recognition of the contractual “rights to money[7] or “any performance under contract having financial value[8] as investments under the treaty. Most mobile applications are known to generate revenue through the advertisements placed on their platforms, the contractual rights here to allow advertisements in exchange for money would be granted protection under the treaty[9]. Similarly, the user agreements on mobile applications, whereby users agree to the application owners’ usage or ownership of user data; pertaining to the application usage, could be considered as a performance under the contract having financial value.[10]

Given the unprecedented scope of such measures, the Indian government must remain conscious of the possibility of an ISDS claim and ensure that their emergency regulatory actions are not arbitrary, discriminatory or disproportionate and are adopted in good faith following due process.[11] It is within this rubric, that this post seeks to delve into the main substantive treaty standards that could become the basis of claims arising out of the measures taken by the Indian government, the substantive obligations owed by India to Chinese investors and the defenses available to India in the event of a breach.


For the Chinese investments that were made prior to October 3, 2018 – which do enjoy protection under the BIT on account of the Sunset clause – there are a few potential claims that can be made against India. It is pertinent that we look at the substantive treaty standards that can give rise to these claims, and whether all interpretive criteria are being met in the current scenario. It is also pertinent that we look at the defenses which would preclude India from any liability arising out of the claims. Such defenses may be established either; (i) on the specific wording of the treaty or; (ii) may be available under customary international law.

1. Fair and Equitable Treatment

The standard of fair and equitable treatment (FET) is the most commonly invoked standard in investment treaty arbitrations, and it can be invoked by Chinese investors subsequent to the ban on the apps. The FET standard typically encompasses the protection of the investor’s legitimate expectations, protection from hostile treatment, harassment and coercion from government authorities as well as a general obligation for host states to act in good faith. The standard requires States to “act in a consistent manner, free from ambiguity and totally transparently” in relation to foreign investors (Tecmed v. Mexico).[12] As provided under Article 3 of the India-China BIT, the FET clause doesn’t have any set interpretive standard that has been agreed upon by both the countries. But the Indian position so far endorses the concept of the International Minimum Standard (IMS), which prescribes a high threshold for the violation of the FET Clause. This interpretation has been endorsed by India under its Joint Interpretive Statements for BITs[13], and has also been stated in awards like Neer v. Mexico.[14] This interpretation suggests that the country’s obligation under the FET standard only extends to the minimum standard of treatment under customary international law and restricts any broad interpretations of the FET standard.

In defending a FET violation, India may invoke Article 14 of the India-China BIT which allows India to take measures for the protection of its Essential Security Interests (ESI) or in circumstances of extreme emergency, provided these measures are; (i) reasonably applied on a non-discriminatory basis and; (ii) are consistent with its domestic laws. For India to prove that the ban was non-discriminatory, it must demonstrate that banning apps was not remote or unrelated to the Indo-China border clash, and was a preventive step to ensure maximum protection against any possibility of data breach or safety of the masses. Essentially, India must be able to prove that the measure of banning the apps was the least intrusive alternative available to protect its national security and safeguard its interests. Further, India must justify that the collective ban was in accordance with its domestic laws, in this case namely, Section 69A of the Information Technology Act, 2000 (‘IT Act’)[15] read with the relevant provisions of the Information Technology (Procedure and Safeguards for Blocking of Access of Information by Public) Rules, 2009 (‘IT Rules’)[16]. Additionally, the India-China BIT also provides that “every state has the right to exercise normal regulatory power in pursuance of public interest measures.”[17] The Press Release states that the applications are blocked by the Government on grounds of public order and public interest. Therefore, India may argue that the measures under the Press Release are not in contravention of international law standards of FET.

While India may seek to justify the defense under the ESI provisions, it may be difficult to explain that the ban was imposed as per the due procedure[18] laid down in its domestic laws under IT Rules, which provide for a process of notice, hearing, and a reasoned order before a ban. A Chinese investor can make a strong case that the ban violates India’s FET obligation under the India-China BIT on account of such procedural irregularities.

2. National Treatment and Most Favored Nation

These clauses guarantee that the respective state parties to a treaty treat one another no less favorably than any other state party they have entered into a treaty with. In other words, it is an assurance not to discriminate between the contracting party’s investors and domestic investors or other foreign investors, under like circumstances. This means that according to Article 4 of the India-China BIT, India holds an obligation to not discriminate between Chinese investors and other domestic or foreign investors, under like circumstances. The inquiry that needs to be made here, in order to defend India’s position, is into the interpretation of the term like circumstances. The phrase like circumstancesensures that comparisons are made only with respect to investors or investments with similar characteristics. Such circumstances may not only include competition in the relevant business sector or economic sectors, but also other additional circumstances, such as the applicable legal and regulatory framework, and whether the differential treatment that had been accorded, was rendered on account of some legitimate public welfare objectives.[19] This makes the interpretation of this standard fact-specific and necessitates the consideration of the entirety of the circumstances. There have been some awards like the one in Daniels Midland v. United Mexican State,[20] which have held that investors or investments that are “in like circumstances” based on the totality of the circumstances, have been discriminated against based on their nationality.  However, there have also been awards such as in Grand River Enterprises v. United States of America,[21] where tribunals have accepted distinctions in treatment between investors or investments that are plausibly connected to legitimate public welfare objectives, and have given weight to whether the investors or investments are subject to like legal requirements, given their circumstances.

3. Expropriation

The expropriation clause, found in Article 5 of the India-China BIT, enumerates a promise from the host state to not physically deprive the Contracting Party’s investor of their investment, or to introduce any measures that would harm the value of the Contracting Party’s investment.[22] In expropriation claims, regardless of the ramifications of the individual expropriation scenarios, tribunals generally look at the overall severity of the host state’s action to determine whether there has been an expropriation or not. If the tribunal thinks that there has been an expropriation, such an act would only be in violation of the underlying treaty or contract, if no compensation is granted to the investor. Although it must be noted that an action by the state with a distinct public purpose provided it is not discriminatory would be exempt from violating this clause, provided that prompt, adequate and effective compensation is accorded to the investors by the host state.[23]

In cases of expropriation, the doctrine of police power serves as a frontier defense. India can make the case that the measure adopted was a part of the State’s police powers. Police powers mean powers that vest with the States, which enables them to undertake bona fide, non-discriminatory measures for the protection of public welfare in general.[24] These powers give the State free reign to regulate public interest in its territory, even if the investment is adversely affected. Though there is no specific provision regarding this in the BIT, since it is a principle of customary international law, its applicability is not conditional upon a specific provision to that effect. Many ISDS tribunals have held that states do not violate their BIT obligations when they act in the exercise of their police powers.[25]


While the ban of the Chinese applications has been well received, with countries like Australia and United States following India’s lead, and taking positions in a new front line in the geopolitical skirmishes of cyberspace; it is pertinent in this situation that all parties carefully analyze the consequences of their actions, taking into account their international investment law obligations and the strength of their claims. Treaty Arbitrations tend to take a significant amount of time and money, and an award either way could prove to be troublesome. It is also crucial to understand that irrespective of whether an arbitration does result in an award favorable to foreign investors, defending every BIT claim will prove to be an expensive burden on the Indian exchequer.

It is clear that the Press release has rendered the Chinese apps substantially unproductive and incapable of yielding any return to the investors involved. Pursuant to this, Chinese investors may seek compensatory relief, which would be extremely expensive, if the compensation includes reputational harm, lost profits, or in rare cases future losses. The investors might also seek restitution, which while a rare remedy, would be readily available.

Further, considering India’s current economic policy and the government’s repetitive position of wanting to attract foreign investments and improving the ease of doing business, attracting more BIT claims might prove to be counterproductive. Additionally, there has been a flurry of investment arbitrations and legal proceedings which have challenged the fundamentals of BIT arbitration in India. India as a contesting party has had lot of fiascoes in BIT arbitrations, sometimes due to weak clauses[26] in the treaty, and sometimes due to inhibited use of legal acumen.[27] There is an imminent need for India to collaborate with the International Community so as to limit the exposure to the current BIT threats that seem to be looming over its head.

[1] Press Information Bureau, Govt. bans 59 Mobile Apps which are Prejudicial to Sovereignty and Integrity of India, Defence of India, Security of State and Public Order, (June 29, 2020),

[2]  India Today, India bans 47 Chinese apps; over 250 more under scanner for user privacy violation, (July 27, 2020),

[3] Hindustan Times, India bans 118 more mobile apps including PUBG, (Sept. 2, 2020),

[4] India-China Bilateral Investment Treaty, Nov. 21, 2006.

[5] Id.  at Art. 1(b).

[6] Id. at Art. 1(b)(iv).

[7] Id. at Art. 1(b)(iii).

[8] Id.

[9] Ikigai Law, India’s ban on Chinese apps: Recourse under International Investment Law, (July 28, 2020),

[10] Id.

[11] Hindustan Times, (April 1, 2020),

[12] Tecnicas Medioambientales Tecmed S.A v. The United Mexican States, ICSID Case No. ARB(AF)/00/2, Decision on Jurisdiction, ¶ 154 (May 29, 2003).  

[13] Anujay Shrivastava; Kaustabh Kapoor, Significance of International Investment Arbitration in India’s efforts toward instituting a robust regulatory regime, 11 Indian J. Int’l. Econ. L. 92 (2019).

[14] L.F.H. Neer and Pauline Neer v. United Mexican States, 4 R.I.A.A. 60-66 (Oct. 15, 1926).

[15] Information Technology Act, No. 21 of 2000, India Code.

[16] Information Technology (Procedure for Blocking of Access of Information by Public) Rules, Act No.10 of 2009, India Code.

[17] India-China Bilateral Investment Treaty, III, Ad. Article 5(3), Nov. 21, 2006.

[18], Is India’s ban on TikTok and 58 other Chinese apps consistent with the provision of the IT Act? (July 1, 2020),

[19] Drafter’s Note on Interpretation of “In like circumstances” under National Treatment and Most Favored Nation Treatment,

[20] Archer Daniels Midland Company and Tate & Lyle Ingredients Americas, Inc. v. The United Mexican States, ICSID Case No. ARB(AF)/04/05, Decision on Jurisdiction (Nov. 21, 2007).

[21] Grand River Enterprises Six Nations, Ltd., Et Al. v. United States of America, ICSID Case No. ARB/10/5, IIC 481, Redacted Decision on Jurisdiction (Jan. 12, 2011).

[22] India-China Bilateral Investment Treaty, Art. 5, Nov. 21, 2006.

[23] The New Indian Express, Economic Measures against China: A BIT to chew on (July 17, 2020),

[24] EJIL:Talk!, ‘Police Powers’ and ‘Regulatory Power in the Pubic Interest’ in International Investment Law (July 28, 2016),

[25] Philip Morris Brands SÀRL, Philip Morris Products S.A. and Abel Hermanos S.A. v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Decision on Jurisdiction (Jul. 8, 2016).

[26] The SCC Online Blog, Bilateral Investment Treaty and Investment Arbitration: A Critique from Indian Perspective (June 26, 2020),

[27] Id.

*Atisha Sisodiya is a corporate lawyer practising in Mumbai. She graduated from Christ University, Bangalore and holds a masters degree in Corporate and Commercial Laws from MNLU Mumbai, India. She has various publications to her credit in reputed Indian and International Law Journals. Atisha’s areas of interests include Corporate Law, Information Technology Law, Dispute Resolution and International Law. She has also served as the Editor for several Indian law journals and blogs.
**Smriti Shandil is a final year undergraduate law student at MNLU Mumbai, India; currently pursuing an honours degree in Corporate Law. A consistent ADR achiever, with a multitude of national and international Negotiation and Mediation Competition wins, Smriti’s interests lie in ADR; specifically Mediations and Arbitrations. Most recently, she was adjudged the winner as part of the team representing MNLU Mumbai at the first INADR Virtual Mediation Tournament, Vilnius. After graduating she aims to pursue her interests and practice in the Dispute Resolution sphere.