NEPAL: THE BIT-LESS HOLDOUT AMONG INDIA’S BELT-AND-ROAD NEIGHBORS

Abstract

Despite its formal engagement in the Belt-and-Road Initiative and significant interest in attracting foreign direct investment, Nepal does not have a bilateral investment treaty with China, unlike all of India’s other contiguous neighbor states who are participating in the Belt-and-Road. Utilizing interviews with scholars and lawyers based in South Asia and other literature on China’s engagement in South Asia, this thesis examines the reasons why Nepal does not have a bilateral investment treaty with China. I argue that the Nepali government’s lack of movement on proposing a BIT with China stems neither from its internal bureaucratic mechanisms nor its historic ties to India thwarting such attempts, but its adoption of a soft-law approach with all of its neighbor-investors. This is not outright resistance against the investor-state regime, as seen in some jurisdictions around the world, but rather a novel approach to redefining the rules of investment dispute resolution to soft law mechanisms on a state-to-state level.