Document Type


Publication Date



The strategic importance of India as an investment destination for foreign investors is highlighted by ongoing tensions in the Indo-Pacific region and the recognition that a strong economic relationship with India is in the interests of countries seeking a more stable balance of power in the region. From a policy perspective, India has struggled to balance its own economic interests with the commercial requirements of investors. Rules attempting to strike this balance have created uncertainties that have resulted in investors seeking greater protections for their investments, which in turn have triggered additional regulatory responses that enforce India’s policy preferences. The prevalent use of put options by foreign investors, whereby Indian parties are required to buy out their counterparties at predetermined prices, has been a prominent subject of these regulations. India’s judiciary has been drawn into this cycle through actions brought by foreign investors seeking to enforce arbitration awards validating their exit rights. In the process, they have created their own interpretation of the applicability of foreign investment rules that support principles of freedom of contract. This doctrinal conflict with regulatory policy is illustrated by a high-profile dispute involving one of Japan’s largest and most well-known companies, NTT Docomo, and one of India’s largest and most trusted companies, Tata Sons. Japan views India as a key strategic partner and, in particular, views strong economic ties as a central linchpin of the partnership. Using, principally, the Tata-Docomo case as an example, and a review of other similar disputes, this Article analyzes the regulatory and judicial doctrines that have shaped foreign investment regulation in India and explores the public policy implications of the conflict for India. In doing so, it proposes regulatory reforms to provide more clarity and certainty for investors, suggesting that express recognition of “downside protection” for investments provides a rational balance between private commercial interests and public regulatory objectives.


Comparative and Foreign Law | Dispute Resolution and Arbitration | International Law | Law


Copyright © 2022 Penn Law: Legal Scholarship Repository.


Center for Japanese Legal Studies