Bilateral treaty between Pakistan and Germany ratified

Signing Ceremony of the Bilateral Investment Treaty (BIT) on 1st December 2009 in Berlin Enlarge image Signing Ceremony of the Bilateral Investment Treaty (BIT) on 1st December 2009 in Berlin (© BMWi)

The "Agreement on the Encouragement and Reciprocal Protection of Investments" between Pakistan and Germany was ratified by Germany on Friday, 08 July 2011. Pakistan ratified the treaty in 2010. However, due to outstanding EU regulations, the treaty could not yet enter into force.

The Agreement had been signed on 1st December 2009 by Pakistani Federal Minister of Investment, Senator Waqar Ahmad Khan, and German Federal Minister for Economic Affairs and Technology, Rainer Brüderle, as well as State Secretary Peter Ammon of the German Federal Foreign Office.

The signing of a new "Agreement on the Encouragement and Reciprocal Protection of Investments" took place at the 50th anniversary of the earlier "Bilateral Investment Treaty" (BIT) between Pakistan and Germany, which was concluded as the first ever international treaty of its kind on 1st December 1959.

The Agreement will replace the old BIT and adds significant new provisions in line with contemporary international standards.

Specifically, the new Agreement contains the following improvements:

- New arbitration clause for the investor which entitles him to file a suit against the government of the country he invested in
- Improved compensation in case of expropriation (payment of interest for the compensation)
- Determination of a maximum deadline of two months for the transfer of capital and revenues

- New arbitration clause for the investor which entitles him to file a suit against the government of the country he invested in

- Improved compensation in case of expropriation (payment of interest for the compensation)

- Determination of a maximum deadline of two months for the transfer of capital and revenues

Bilateral investment treaties provide investors with the best possible legal protection under international law; they also enable the German Federal Government to issue international investment guarantees, significantly facilitating German investments to Pakistan. Germany has concluded 126 such treaties with countries all over the world.

Germany believes that the new Treaty will create further incentives for investment in Pakistan and can thereby help to contribute to economic growth.