Q. With reference to Bilateral Investment Treaty Agreement (BIT) consider the following statements:
1.It establishes minimum guarantees between the two countries regarding the treatment of foreign investments and protect them from arbitrary decisions of national governments. 
2.BITs have a potential to attract Foreign Direct Investment (FDI).
3.BITs mostly do not include mechanisms for settling disputes between the nations.
Which of the statements given above are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3only

[D] 1, 2 and 3

Answer: A
Notes:

Explanation-

Statement 1 and 2 are correct. BITs establish minimum guarantees between the two countries regarding the treatment of foreign investments and protect them from arbitrary decisions of national governments. BITs have a potential to attract Foreign Direct Investment (FDI).

Statement 3 is incorrect. BITs generally provide a mechanism for settling disputes between investors and the country of investments. The most preferred mode of settling such disputes is arbitration.

Source: ForumIAS