New Delhi: India has summarily rejected a proposal by Canada and the European Union (EU) to negotiate a multilateral agreement on investment that would include contentious issues such as allowing multinational companies to drag a government into arbitration in case of a dispute.

The proposal was made at an informal breakfast meeting of trade ministers on the sidelines of the World Economic Forum (WEF) in Davos last week. Commerce minister Nirmala Sitharaman, present at the meeting, said India had prepared a model Bilateral Investment Treaty (BIT) that would form the basis of negotiation with countries. “India rejected the proposal to formalize a multilateral treaty on investment based on a trade deal between Canada and the EU,” she said.

European trade commissioner Cecilia Malmström had proposed that EU and India first negotiate a BIT before they restart negotiation for the free trade agreement.

India would unilaterally terminate all existing investment treaties on 31 March, having given one year’s time to countries to renegotiate the treaties based on the model BIT passed by the cabinet. India brought out a new model BIT in December 2015, intending to replace its existing Bilateral Investment Promotion and Protection Agreements (BIPAs) and future investment treaties, after being dragged into international arbitration by foreign investors who sued for discrimination citing commitments by India to other countries in bilateral treaties.