Articles

The 2016 version of the Model Bilateral Investment Treaty unveiled by India reflects a major step towards clearing India’s not-so-attractive reputation in the world of international investment. The Model text however, though a revised version of the draft text released in 2015, still does not elevate India to the standard of an investment friendly country. Various provisions of the Model Bilateral Investment Treaty are a knee-jerk reaction to the investment claims faced by India in the past, and they seek to safeguard the regulatory powers of the State more than the catering to the objective of investment promotion and protection. The Model Bilateral Investment Treaty also deviates from various traditional norms of Bilateral Investment Treaties, which could back re in the long-run as the scope of application and interpretation of these new standards could remain with the arbitral tribunals which may choose a liberal interpretation over a narrow one. Therefore, India should embrace the current trends in investment protection from around the world even more to remain in competition for attracting foreign investments.

The Finance Act, 2015 amended §6(3)(ii) of the Income Tax Act, 1961 to introduce a new test for determining the residential status of companies. The new test is called the ‘Place of Effective Management’ test for interpretation of which, the Central Board of Direct Taxes has recently issued draft guide- lines. This test replaces the erstwhile control and management test which has common law origins and was laid down in a context that best suited the interests of imperial powers. Looking closely at the workings of the erstwhile test and comparing it with the definition and draft guidelines on the Place of Effective Management test, it emerges that there is much similarity. Further, the government’s justifications for making this amendment are on shaky ground which raises some fundamental concerns which need to be addressed first. ‘Place of Effective Management’ does not have a universally accepted meaning and Organisation for Economic Co-operation and Development which does recognise the concept, has now recommended adopting a case-by-case approach to determine the residential status of companies to tackle tax avoidance. Alignment of the domestic law with the so-called international standard of Place of Effective Management (where it used as a tie-breaker rule in a number of Double Taxation Avoidance Agreements), would only reduce the tie-breaker rule of Place of Effective Management to naught.

Clinical legal education emerged in the United States in the 1960s to give valuable skill-based instructions to law students while providing legal ser- vices to people who could not otherwise afford them. This essay proposes another reason why both Indian and American law schools should support the development of law clinics. Drawing on the works of John Dewey and Martha Nussbaum, I argue that clinical legal education promotes democracy. Both elite American and Indian universities are largely unrepresentative of the respective population demographics of their countries. In clinics, law students bridge this divide by undertaking representation for people from different racial, caste, and income backgrounds than themselves. These exchanges generate empathy and knowledge among students about the challenges marginalised groups in the society face. Consequently, they learn to recognise other citizens as equals and to formulate policies that will enhance the welfare of society as a whole. There is an urgent need to formalise clinical legal education programs in Indian law schools both for purposes of enhancing the democracy as well as providing skill-based training to law students and much-needed legal services to the poor.