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, 1973. It will be headed by the Minister for Commerce and comprise the Minister for Economic Affairs, Secretary Foreign Affairs Division, Secretary Commerce Division, Secretary Law and Justice Division, Director General Special Investment Facilitation Council (SIFC), a representative of the Attorney General for Pakistan and Secretary Board of Investment (BoI), who will also serve as its secretary. The committee has been tasked with examining the reasons and approval process followed by the Board of Investment for issuing the notice of termination of the Bilateral Investment Treaty between Pakistan and Sweden, signed in 1981. It will also formulate guidelines to be followed before issuing such termination notices in future. READ ALSO: Pakistan decides to renegotiate investment treaty with Sweden The committee will examine the outcomes of the termination of BITs with 25 countries under Pakistan’s BIT Strategy 2021 and determine whether the strategy and Pakistan Model Bilateral Investment Treaty Template, 2021, remain relevant in the contemporary international economic environment. It will also prepare a draft BIT Policy for Pakistan covering, among other areas, investment protection provisions, Most Favoured Nation (MFN) criteria, Fair and Equitable Treatment (FET) standards and dispute resolution mechanisms. The committee has been directed to submit its report to the Cabinet within the current month, while the BoI will provide secretarial support. The formation of the committee follows the Cabinet’s decision to revoke Pakistan’s notice of termination of its BIT with Sweden before it takes effect on September 28, 2026, and initiate renegotiations of the existing agreement to modernise its provisions in line with Pakistan’s current investment protection framework and policy objectives. Pakistan has concluded 53 BITs with various countries over several decades. According to the BoI, many first-generation BITs, negotiated mainly during the 1990s and early 2000s, contained broad and ambiguously worded investment protection provisions, including wide-ranging MFN clauses, unqualified FET standards and expansive Investor-State Dispute Settlement (ISDS) mechanisms. The BoI maintains that such provisions exposed Pakistan to significant risks and costly international investment arbitration. BITs with 25 countries have been terminated, while 29 treaties remain in force. Several renegotiations are either underway or have been proposed. The Pakistan-Sweden BIT issue was revisited after the Ministry of Foreign Affairs, in a communication dated June 11, 2026, requested the BoI and Ministry of Commerce to review the termination notice before it took effect. The Foreign Ministry highlighted the nature of Pakistan’s bilateral relationship with Sweden and the potential implications of termination for investor confidence. It also requested that the matter be examined in the context of Pakistan’s trade, investment and broader European Union-related economic interests. During the discussion, Cabinet members observed that Pakistan enjoyed longstanding diplomatic and economic ties with Sweden and that termination of the BIT could have adverse implications for foreign direct investment flows from Sweden as well as other countries. The Cabinet, therefore, stressed that the termination notice should be revoked before becoming effective on September 28, 2026. The Cabinet unanimously endorsed the first option, approving revocation of Pakistan’s notice of termination and initiation of renegotiations of the existing agreement. The objective of the renegotiations will be to modernise the treaty and align its provisions with Pakistan’s current investment protection framework and policy objectives. However, the Cabinet also raised questions over the original decision to issue the termination notice. It observed that the facts and grounds on which the decision was based, as well as the authority that approved issuance of the notice to Sweden, needed to be ascertained. Cabinet members further noted that issuing such notices without proper appraisal and a thorough assessment of the potential adverse consequences of terminating a BIT could jeopardise Pakistan’s economic relations with other countries. Copyright Business Recorder, 2026

Read full story on Business Recorder