A. Introduction
The landscape of international investment protection has undergone a seismic shift in India over the past decade. Once a champion of Bilateral Investment Treaties (BITs) with over 80 such agreements, India has dramatically reversed course, terminating the majority of these treaties and adopting a restrictive Model BIT in 2016.1 This fundamental restructuring has created significant uncertainty for foreign investors operating in the Indian market. The ongoing dispute between Turkish aviation firm Çelebi and Indian authorities presents a compelling case study that illuminates the practical implications of this policy reversal. As Çelebi battles the sudden revocation of its security clearance and subsequent termination of its airport service contracts, the case reveals the vulnerabilities foreign investors face in India's post-BIT environment, particularly when national security concerns intersect with investment protection.
This article examines the Çelebi dispute within the broader context of India's evolving approach to foreign investment protection, analyzing both the theoretical underpinnings and practical consequences of the post-BIT regime. By exploring alternative protection mechanisms and drawing comparative insights from other jurisdictions, we aim to provide a comprehensive understanding of the new reality facing foreign investors in India.
B. India’s Retreat from BITs: A Paradigm Shift
I. The Rise and Fall of India's BIT Program
India's engagement with BITs began in earnest in the 1990s, coinciding with its economic liberalization policies. The India-UK BIT of 1994 marked the beginning of a period of enthusiastic treaty-making aimed at attracting and incentivizing foreign investment.2 These early BITs, modeled after agreements developed by capital-exporting nations, emphasized investor protection over state regulatory powers. This investor-friendly approach remained largely unchanged for nearly two decades. However, the watershed moment came in 2011 with the White Industries case,3 where India faced its first adverse award in an international investment arbitration. Between 2011 and 2016, India confronted a surge of investment treaty claims that prompted a fundamental reassessment of its BIT framework.
II. The 2016 Model BIT: A New Direction
The 2016 Model BIT represents a radical departure from India's previous approach. Key changes include:
- An enterprise-based definition of investments, narrowing the scope of protected assets
- Elimination of the Fair and Equitable Treatment (FET) clause, replacing it with a more limited "treatment of investments" standard
- Removal of the Most Favored Nation (MFN) provision
- Requirement to exhaust domestic remedies for a minimum of five years before pursuing international arbitration
- A shorter sunset clause of five years, compared to the typical ten or fifteen years in most treaties
Following the adoption of this model, India terminated 58 of its existing BITs and began the process of renegotiating agreements based on the new template.4 This dramatic policy shift has fundamentally altered the legal landscape for foreign investors operating in India.5
C. The Çelebi Dispute: A Case Study in Vulnerability
I. Çelebi's Substantial Presence in India
Çelebi Aviation has established a significant footprint in India over the past 15 years, investing approximately $250 million in the country's aviation sector.6 The Turkish company operates through subsidiaries such as Çelebi Airport Services India Pvt. Ltd. and Çelebi Delhi Cargo Terminal Management India Pvt. Ltd., providing ground handling and cargo management services at major airports including Delhi, Mumbai, Bengaluru, and Hyderabad.
With more than 10,000 employees across India, Çelebi has become an integral part of the country's aviation infrastructure.7 The company manages approximately 500,000 tons of cargo annually and handles services for around 58,000 flights. At Mumbai's Chhatrapati Shivaji Maharaj International Airport alone, Çelebi was responsible for nearly 70% of ground operations, including passenger services, load control, flight operations, and cargo services.
II. The Security Clearance Controversy
The dispute erupted in May 2025 when the Bureau of Civil Aviation Security (BCAS) abruptly revoked Çelebi's security clearance, citing vaguely defined "national security concerns." This decision came against the backdrop of escalating geopolitical tensions, particularly following India's Operation Sindoor, during which Turkey had publicly supported Pakistan. Reports suggested that Turkish-made drones had been used against India, fueling nationalist sentiment and calls for action against Turkish interests.
In response to the security clearance revocation, airport operators across India, including Mumbai International Airport Limited (MIAL) and Chennai Airport, terminated their contracts with Çelebi. MIAL appointed IndoThai as an interim replacement, while over 10,000 Çelebi employees were hastily transferred to alternative service providers including Air India SATS Airport Services, AI Airport Services, and Bird Group.
III. Çelebi's Multi-Forum Legal Challenge
Çelebi Aviation has mounted a robust multi-forum legal challenge in response to the revocation of its security clearance and the termination of its contracts across major Indian airports. The company has initiated proceedings in both the Delhi and Bombay High Courts, as well as commenced arbitration. In the Delhi High Court, Çelebi has questioned the legal validity of the Bureau of Civil Aviation Security’s (BCAS) decision to revoke its security clearance, asserting that the action was taken without prior notice or an opportunity to be heard, thereby violating fundamental principles of natural justice. Simultaneously, in the Bombay High Court, Çelebi has filed multiple petitions contesting both the security clearance revocation and the subsequent termination of ground handling contracts by Mumbai International Airport Limited (MIAL). In addition to its constitutional challenges, Çelebi has also invoked Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief through arbitration to preserve its operational assets and contractual rights.
In its legal submissions, Çelebi emphasized that it is majority-owned (65%) by international institutional investors from countries such as Canada, the United States, the United Kingdom, Singapore, the UAE, and Western Europe, with only a limited connection to Turkey. The company further asserted that the termination of its contracts caused massive business disruption and jeopardized thousands of Indian jobs. It argued that the actions taken against it were politically motivated, rooted in recent geopolitical tensions between India and Turkey, rather than grounded in any legitimate or evidenced national security threat.
IV. Interim Judicial Response
On May 26, 2025, the Bombay High Court granted interim relief to Çelebi, staying MIAL from concluding the bidding process for replacement service providers. Bombay High Court ruled that the interim order would remain in force until the matter could be heard by a regular bench after the court vacation period.
During the hearing, Çelebi's counsel emphasized the company's substantial investments in equipment and software, arguing that MIAL was attempting to appoint third parties who would exploit these resources. Government representatives countered that appointing replacement providers was necessary for maintaining operational continuity and passenger convenience. Meanwhile, the Delhi High Court heard detailed arguments from both sides regarding the security clearance revocation and reserved its judgment on May 23, 2025. Çelebi has drawn parallels to the Supreme Court's Media One case (2023), which established that vague national security claims cannot override due process without substantial judicial review.
D. The Legal Vacuum: Investment Protection Without BITs
I. Limited Recourse Under the Current Framework
The Çelebi dispute underscores the legal and institutional vacuum that has emerged following India’s withdrawal from its network of Bilateral Investment Treaties (BITs). These treaties historically provided foreign investors with robust mechanisms—such as access to international arbitration and protections against unfair treatment—to safeguard their interests in host states. With India’s widespread BIT terminations, foreign investors are now left to navigate a legal environment where meaningful protections are significantly diluted.
In the absence of treaty-based safeguards, foreign investors in India must primarily rely on three avenues of recourse. First, they may pursue domestic litigation, which presents its own challenges given the sheer volume of backlog—India currently faces over 43.2 million pending cases across its judicial system.8 Second, investors can attempt to invoke commercial arbitration, provided their contracts include arbitration clauses. However, these mechanisms typically address disputes of a private contractual nature and are often inadequate for resolving grievances arising from regulatory or administrative actions such as security clearances or governmental sanctions. Third, investors may seek diplomatic protection by appealing to their home governments to intervene. Yet, this path is highly discretionary, often influenced by political calculations, and offers no guaranteed remedy.
In Çelebi’s case, the situation is rendered even more precarious due to the absence of a sunset clause in the now-terminated India–Turkey BIT.9 Sunset clauses are designed to protect pre-existing investments for a defined period—usually 10 to 15 years—even after a treaty has been terminated. Had such a clause existed, Çelebi might have retained access to international dispute resolution forums. Instead, the company is now entirely reliant on India's domestic legal remedies—a process fraught with procedural delays, limited transparency, and uncertainty, especially when national security claims are involved.
II. National Security vs. Investor Rights: A Delicate Balance
The Çelebi dispute exemplifies the tension between legitimate national security concerns and foreign investment protection. While states unquestionably retain the right to regulate on security matters, international norms require that such measures be necessary, proportionate, and implemented with due process. Indian jurisprudence, through cases like PUCL v. Union of India (1997) and the more recent MediaOne (2023) judgment, has established that national security claims are not beyond judicial scrutiny. The Supreme Court has emphasized that even when security considerations are legitimate, they must be balanced against due process requirements and fundamental rights.
However, in practice, courts often show substantial deference to executive determinations on security matters. This creates vulnerability for foreign investors, particularly in sensitive sectors like aviation, telecommunications, and defense, where regulatory actions can be justified under broad security rationales with limited judicial oversight.
E. Comparative Perspectives: Alternative Approaches to Investment Protection
I. The South African Model: Domestic Legislation
South Africa, like India, terminated many of its BITs between 2012 and 2014. However, South Africa adopted a different approach by enacting the Promotion and Protection of Investment Act (2015). This legislation establishes a statutory framework for investment protection, including:
- Codified standards for fair administrative treatment
- Non-discrimination provisions
- Protection against expropriation without compensation
- Dispute resolution through domestic mediation and courts
While the South African model eliminates investor-state arbitration, it provides a clear and transparent legal framework that gives investors certainty about their rights and remedies.
II. The Brazilian Approach: Cooperation and Facilitation
Brazil has charted a unique path in investment protection, developing Cooperation and Facilitation Investment Agreements (CFIAs) rather than traditional BITs. This model emphasizes:
- Institutional cooperation between governments
- Dispute prevention through ombudsmen and joint committees
- State-to-state consultation and dispute resolution
- Promotion of responsible business conduct Brazil's approach prioritizes addressing investor concerns before they escalate into formal disputes, with a focus on cooperative problem-solving rather than adversarial litigation.
III. India's Gap: Absence of Alternative Frameworks
Unlike South Africa and Brazil, India has not established comprehensive alternative mechanisms to replace the protections previously offered by BITs. The 2016 Model BIT represents a significant narrowing of investor rights without corresponding institutional innovations to ensure fair treatment.
This creates a regulatory vacuum where foreign investors face increased uncertainty with few established channels for addressing grievances. For companies like Çelebi, this translates to greater vulnerability to political risks and administrative actions, particularly when geopolitical tensions arise.
F. Navigating the New Reality: Strategies for Foreign Investors
I. Contractual Protections and Arbitration Clauses
In the absence of treaty-based protections, foreign investors must increasingly rely on sophisticated contractual arrangements to safeguard their investments. Detailed contractual safeguards can substitute, to some extent, for the protection traditionally afforded under BITs.
This includes the incorporation of stabilization clauses that shield investors from adverse regulatory changes during the life of a project, and comprehensive arbitration clauses that specify neutral seats (such as Singapore, London, or Paris), applicable governing laws, and preferred procedural rules. The inclusion of multi-tiered dispute resolution mechanisms, such as step clauses that require negotiation and mediation before initiating formal arbitration, can also foster amicable resolutions. Furthermore, foreign investors should seek express waivers of sovereign immunity by the host state for all commercial activities, ensuring enforceability of arbitral awards. Data from the 2021 International Arbitration Survey shows that 81% of respondents favored contract-based arbitration mechanisms over domestic litigation, underscoring the growing reliance on private dispute resolution in state-investor conflicts.10
II. Political Risk Insurance
Another critical tool in the post-BIT environment is political risk insurance, which serves as a financial buffer against the very types of state conduct that BITs previously addressed. Public providers such as OPIC (United States), Euler Hermes (Germany), NEXI (Japan), and MIGA (under the World Bank Group) offer structured products that protect investors against expropriation, currency inconvertibility, civil unrest, and breach of contract.11 Additionally, private political risk insurers increasingly provide customized coverage for cross-border projects. These instruments can be essential for investors operating in high-risk jurisdictions where legal remedies are slow or uncertain and can also enhance bankability of projects by de-risking exposure to sovereign actions.
III. Strategic Investment Structuring
Foreign investors are also advised to engage in strategic structuring of their investments to preserve eligibility under favorable BITs. This may involve routing investments through jurisdictions that maintain active BITs with India, such as the Netherlands or Singapore. However, such structuring must be accompanied by substantial business activity in the intermediary jurisdiction to avoid allegations of “treaty shopping,” which international tribunals have increasingly scrutinized. In complex investments, establishing multi-layered corporate ownership structures can enable access to multiple legal frameworks, enhancing protection flexibility. Importantly, investors should remain nimble and prepared to restructure existing investments in response to legal and geopolitical shifts, while ensuring that such actions are undertaken in good faith and for legitimate business purposes.
G. Policy Recommendations: Balancing Investment Protection and State Sovereignty
I. Institutional Reforms for Investor Confidence
As India seeks to position itself as a premier investment destination, it must undertake institutional reforms to strike a balance between regulatory sovereignty and the need to protect legitimate foreign investments. First, the establishment of specialized commercial courts, such as those proposed in the Gujarat International Finance Tec-City (GIFT IFSC), could expedite investment-related litigation through streamlined procedures. Second, building world-class international arbitration centers within India would reduce dependence on foreign forums and strengthen India’s legal infrastructure. Third, a central advance ruling authority for foreign investors could provide binding clarity on regulatory issues before major investments are committed, helping to avoid ex-post disputes. Lastly, the creation of an investment ombudsman—an independent office empowered to mediate between investors and state agencies—would introduce a mechanism for early resolution of conflicts and systemic investor feedback.
II. Legislative Framework for Investment Protection
Beyond institutions, India requires a clear legislative framework to protect foreign investments under domestic law. A comprehensive Investment Protection Act should enshrine core principles such as non-discrimination, fair and equitable treatment, and compensation for expropriation. Such legislation should also mandate transparent procedures for national security reviews, with explicit timelines, evidentiary standards, and the right to appeal. Further, Indian law should guarantee administrative due process, including the right to prior notice, the opportunity to be heard, and reasoned written decisions. Given the slow pace of litigation, the law should also provide for expedited judicial review procedures, particularly where regulatory actions may irreparably harm ongoing foreign investments.
III. Balanced Treaty Policy
India’s conservative approach to treaty-making, embodied in the Model BIT 2016, must now be recalibrated. While the emphasis on regulatory space and domestic exhaustion is understandable, several moderate reforms would enhance the credibility of India’s BIT regime. First, the five-year domestic litigation requirement should be shortened to a more commercially reasonable period—ideally between one and two years. Second, the national security exception should be refined to define its scope and applicability, minimizing abuse. Third, the Model BIT should bolster procedural guarantees to ensure investors receive adequate notice, explanation, and avenues to challenge adverse measures. Lastly, introducing a mandatory mediation protocol before arbitration could foster early resolution of disputes, reducing the volume and cost of international arbitration.
H. Conclusion
The Çelebi dispute represents more than a single company's legal battle—it serves as a bellwether for the future of foreign investment protection in India's post-BIT era. As the case unfolds in the courts, it will test the adequacy of domestic remedies and the balance between national security imperatives and investor rights. For India, the challenge is to maintain its attractiveness as an investment destination while preserving regulatory sovereignty. The experience of other countries demonstrates that withdrawing from traditional BITs need not create a protection vacuum if accompanied by thoughtful alternative frameworks.
For foreign investors, the new reality demands a multifaceted approach to risk management, combining contractual protections, political risk insurance, strategic structuring, and engagement with host governments. Understanding both the limitations and opportunities of India's evolving legal landscape is essential for navigating these uncharted waters. As global investment patterns continue to evolve, the resolution of the Çelebi case may well shape the future trajectory of India's approach to foreign investment protection. Whether it catalyzes positive reforms or reinforces concerns about regulatory uncertainty will significantly impact India's position in the global investment community for years to come.
Footnotes
1 Ministry of Finance, Govt. of India, Status of Indian BITs (2023), https://dea.gov.in/bipa.
2 India–United Kingdom Bilateral Investment Treaty, Jan. 6, 1994.
3 White Industries Australia Ltd. v. Republic of India, Final Award, UNCITRAL (Nov. 30, 2011),
4 Ministry of External Affairs, List of BITs Terminated by India (2021), https://mea.gov.in.
5 Govt. of India, Model Text for the Indian Bilateral Investment Treaty (2016), https://dea.gov.in/sites/default/files/ModelBIT_Annex_0.pdf.
6 Economic Times, Turkey’s Çelebi Aviation Sues Indian Government for Revoking Security Clearance (May 2024), https://economictimes.indiatimes.com.
7 The CSR Journal, Çelebi Sues India Over Permit Withdrawal (May 2024), https://thecsrjournal.in.
8 National Judicial Data Grid, Dashboard of Pending Cases in Indian Courts (2024), https://njdg.ecourts.gov.in/njdgnew/.
9 Jeswald W. Salacuse, The Law of Investment Treaties 281 (2d ed. 2015).
10 Queen Mary Univ. of London & White & Case LLP, 2021 International Arbitration Survey: Adapting Arbitration to a Changing World (2021), https://www.whitecase.com.
11 Multilateral Investment Guarantee Agency (MIGA), Political Risk Insurance Guide (2023), https://www.miga.org.
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