ISLAMABAD, July 26: The United States and Germany have asked Pakistan to provide legal cover to their investors by updating domestic laws through parliament.

Official sources told Dawn here on Monday that a draft bill would soon be introduced in the National Assembly for updating domestic laws to provide legal cover to the foreign investors.

These laws will be updated by parliament in the light of recommendations of a top level committee headed by Special Advisor to the Government Syed Sharifuddin Pirzada. Informed sources said that the government would also be amending the Arbitration Acts of 1937 and 1940 to help the foreign investors seeking international arbitration for protecting their investment and assets in Pakistan in case of any litigation.

The US government and Germany have promised substantial investment provided Pakistan effectively implemented the New York Convention of 1958 that had otherwise been ratified by Islamabad.

Pakistan was also urged by both the countries to implement the decisions of international arbitrators which were not currently being implemented thus forcing the foreign investors to stay away from making any sizable investment in the country.

The sources said that the Board of Investment (BoI) was finalising Bilateral Investment Agreements with a number of countries including the United States and Germany. The senior officials of both the countries have called for such bilateral agreements during their recent visits to Pakistan.

US Deputy Secretary of State Richard Armitage and German Foreign Minister Joschka Fischer have reportedly urged the government to update local laws with a view to attracting foreign investment.

"We may have to compromise on our sovereignty by accepting the demands of the foreign governments on the investment issue," a source said adding that Pakistan had given commitment to Washington and Germany that domestic laws would be updated to help the foreign investors.

He said that recommendations were also currently being finalized to sign "Model Agreement" with a number of countries for attracting investment in the country. He said the model agreement would protect foreign investment/assets against nationalization and expropriation and would create confidence among foreign investors about Pakistani laws.

The sources said that the proposed model agreement would also provide a legal remedy to foreign investors in case of arbitration. Foreign investors, the sources said, maintained that Pakistani courts did not provide them remedy in case of any dispute, therefore they should be allowed to seek the involvement of international arbitrators or international arbitration commission.