As noted previously, the India-Nepal BIT had run into early trouble with a challenge being mounted against it before the Supreme Court of Nepal. As per the latest reports, the Supreme Court of Nepal issued an interim order in the case yesterday (28 November). Essentially, it seems the Court has stayed the “implementation” of Article 15 the BIT till the Agreement is ratified by the Nepalese legislature. Article 15, on the “Entry into Force” of the Agreement, reads:
This Agreement shall come into force on the date of exchange of diplomatic notes confirming that the legal requirements of the Contracting Parties have been fulfilled for the entry into force of this Agreement.
In effect, it seems that by staying the implementation of Article 15 the court stayed the exchange of diplomatic notes, till the BIT is not ratified by the Nepalese legislature, as required by the Constitution. An unofficial tranlsation of the operative paragraph of the Order reads:
The bench hereby orders the government not to implement the provision incorporated in Article 15 of the Agreement until it completes procedures as per the Article 156 of the Interim Constitution.
Article 156 of the Constitution, titled “Ratification of, Accession to, Acceptance of or Approval of Treaty or Agreements” provides that:
(1) The ratification of, accession to, acceptance of or approval of treaties or agreements to which the State of Nepal or the Government of Nepal is to become a party shall be as determined by the law.
(2) The laws to be made pursuant to clause (1) shall, inter alia, require that the ratification of, accession to, acceptance of or approval of treaty or agreements on the following subjects be done by a two-thirds majority of the total number of members of the Legislature-Parliament present in the House:-
(a) peace and friendship;
(b) security and strategic alliance;
(c) the boundaries of Nepal; and
(d) natural resources and the distribution of their uses.
The Court, however, refused to grant a stay against the implementation of the BIT as a whole, noting that:
“Issuing a stay order that asks the government authority to completely halt the implementation process of entire BIPPA is inappropriate from the point of view of balance of convenience,”
“The bench, however, hereby orders the government not to implement the provision incorporated in Article 15 of the Agreement until it completes procedures as per the Article 156 of the Interim Constitution.”
The bench made it clear that the order shall exist till parliamentary process or a final decision in the case by the apex court and declined to stay the process of parliamentary approval, saying BIPPA was of utmost importance as it aimed to protect and promote bilateral investment and that a stay order would create adverse impact on the objectives of the agreement. “Parliament can examine whether any provision of the agreement contradicts the Interim Constitution as per Article 156, henceforth it would be wrong to draw a conclusion that the agreement undermined country’s sovereignty and integrity, as claimed by the writ petitioner,” reads the order. “It will be improper to raise doubts on legislative wisdom.”
The Court’s decision is quite unsurprising. In fact, it doesn’t really say anything that cannot be inferred from a logical reading of Article 15 of the BIT, which itself notes that diplomatic notes shall be exchanged only once the domestic legal requirements in each state have been met. For Nepal, this clearly means ratification by the legislature under Article 156 of the interim constitution. Basically, the Court seems only to have spelled out and related the requirements under Article 15 of the BIT and Article 156 of the interim constitution.