Evolving global economic context: Body to prepare draft BIT policy
ISLAMABAD: The Federal Cabinet has constituted a committee to review Pakistan’s bilateral investment treaty (BIT) framework and prepare a draft BIT Policy in line with the evolving global economic context, well-informed sources told Business Recorder . The committee, to be known as the Committee on Bilateral Investment Treaties, has been constituted under Rule 17(3) of the Rules of Business,…
The Federal Cabinet in Pakistan has established a committee to evaluate the nation's bilateral investment treaty (BIT) structure and draft a new BIT Policy, according to Business Recorder. The committee, referred to as the Committee on Bilateral Investment Treaties, has been set up under Rule 17(3) of the Rules of Business, 1973 and will be chaired by the Minister for Commerce.
It includes the Minister for Economic Affairs, Secretaries from the Foreign Affairs Division, Commerce Division, Law and Justice Division, Director General of the Special Investment Facilitation Council (SIFC), a representative from the Attorney General for Pakistan, and the Secretary of the Board of Investment (BoI), who will also serve as the committee's secretary.
The committee's primary task is to analyze the rationale and approval process followed by the Board of Investment for terminating the Bilateral Investment Treaty between Pakistan and Sweden, signed in 1981. Moreover, it will draft guidelines for future termination notices. The committee will also examine the results of terminating BITs with 25 countries under Pakistan's BIT Strategy 2021 and ascertain whether the strategy and the Pakistan Model Bilateral Investment Treaty Template, 2021, remain relevant in today's global economic climate.
The committee's report is expected to be submitted to the Cabinet within the current month. The BoI will provide secretarial assistance. The committee's creation followed the Cabinet's decision to revoke Pakistan's notice of termination of its BIT with Sweden before the termination takes effect on September 28, 2026, and initiate renegotiations of the existing agreement to update its provisions according to Pakistan's current investment protection framework and policy goals.
Pakistan has signed 53 BITs with various countries over the years. Many first-generation BITs, primarily negotiated during the 1990s and early 2000s, contained broad and vaguely worded investment protection provisions, including broad MFN clauses, unqualified FET standards, and extensive Investor-State Dispute Settlement (ISDS) mechanisms.
The BoI believes that these provisions exposed Pakistan to substantial risks and costly international investment arbitration. In total, 29 BITs remain in force, and several renegotiations are either underway or proposed.
The possibility of terminating the BIT with Sweden was reviewed after the Ministry of Foreign Affairs, in a communication dated June 11, 2026, asked the BoI and the Ministry of Commerce to reassess the termination notice before it became effective. At the meeting, Cabinet members recognized Pakistan's long-standing diplomatic and economic ties with Sweden and the potential consequences of termination for investor confidence, particularly from Sweden and other countries.
Consequently, the Cabinet unanimously approved revocation of Pakistan's termination notice and the commencement of renegotiations of the existing agreement. The renegotiations aim to modernize the treaty and align its provisions with Pakistan's current investment protection framework and policy objectives.
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