US to issue investment guarantees for India projects, no liability to India

It allows the US government to issue additional forms of guarantees authorized by US legislation to facilitate economic development in India.

Who it concerns: The agreement involves the Government of India (specifically the Department of Economic Affairs, Ministry of Finance) and the Government of the United States of America. It affects private enterprises and US nationals investing in projects approved by the Indian government.

What was agreed

• The US government will issue investment guarantees providing coverage authorized by applicable US legislation for appropriate investments in India.
• There will be no claim for reimbursement against the Government of India for payments made by the US on extended risk guarantees.
• Intergovernmental negotiation and arbitration procedures apply to additional guarantees only for losses attributable to acts of the Indian government involving liability under public international law.
• The principle from paragraph 3 of the 1957 exchange of notes applies to property or commercial claims transferred to the US in exchange for compensation.
• Obligations of both governments regarding risks covered in the 1957 and 1959 agreements remain unchanged.
• No other obligations are required of the Government of India regarding the additional forms of guarantees.

Also in the document

• The agreement explicitly states that the Government of India will not be liable for reimbursement on extended risk guarantees.
• The agreement clarifies that arbitration procedures for new guarantee types are limited to losses involving public international law liability.