Pharmaceutical Patents and Expropriation in Indian Bilateral Investment Treaties

Abstract

This chapter discusses whether foreign investors, specifically pharmaceutical companies, could challenge India’s regulatory measures that impact their patents under India’s BITs. More specifically, the paper will focus on whether regulatory measures such as compulsory licensing of pharmaceutical patents or revocation of pharmaceutical patents amounts to indirect expropriation under India’s bilateral investment treaties (BITs). The discussion in the chapter shows that pharmaceutical patents would easily qualify as foreign investments under Indian BITs especially when the economic characteristics test is not to be satisfied. As regards, regulatory measures pertaining to pharmaceutical patents such as issuance of CL or revocation or limitation of patents is concerned, the outcome would depend on two factors – first, the language of the treaty such as whether it exempts issuance of CL from the ambit of expropriation or whether the BIT makes a reference to the police power test; and second, the approach of the arbitral tribunal – whether the tribunal uses the ‘sole effect’ test or the ‘police power’ test to determine indirect expropriation.

Keywords: India, BIT, bilateral investment treaties, Indian Model BIT, pharmaceuticals