Pakistan and Sweden will sit down in November to rewrite a 45-year-old investment treaty, just weeks after Islamabad reversed a decision to terminate the agreement entirely — a reversal driven largely by concern over what scrapping it could do to investor confidence.
When and Where the Talks Will Happen
According to a government official, the first round of talks between Pakistan and Sweden is scheduled for November 17-18 in Islamabad. Swedish Ambassador Alexandra Berg von Linde confirmed Sweden welcomes the renewed negotiations, aimed at updating the bilateral investment agreement to reflect modern standards. Pakistan is pursuing a similar renegotiation track with Hungary at the same time, with officials hoping for an early agreement on both fronts.
How We Got Here: A Termination That Almost Happened
The Pakistan-Sweden Bilateral Investment Treaty (BIT) was signed in Stockholm in March 1981 and has been in force since that June, providing legal protections — including safeguards against arbitrary treatment and expropriation, and access to international arbitration — for Pakistani and Swedish investors operating in each other’s countries. Pakistan had actually issued a notice to terminate the treaty, set to take effect on September 28, 2026, before the federal cabinet reversed course on August 10 and withdrew the termination notice entirely.
The reversal followed direct intervention from Pakistan’s Ministry of Foreign Affairs, which wrote to the Board of Investment and Ministry of Commerce on June 11 specifically requesting a review of the termination notice before it took effect, citing the strength of Pakistan’s bilateral relationship with Sweden and the potential damage to investor confidence. Notably, the cabinet also directed that the facts, grounds, and approvals behind the original termination decision be formally ascertained — a signal that officials themselves weren’t entirely clear on why the termination notice had been issued in the first place.
Why Pakistan Was Terminating BITs in the First Place
| Status | Number of BITs |
|---|---|
| Terminated | 25 countries |
| Currently in force | 29 treaties |
| Under renegotiation or proposed | Several, including Sweden and Hungary |
This broader wind-down traces back to Pakistan’s BIT Strategy 2021, under which the country moved to terminate 23 older investment treaties, driven by concern that older-style agreements exposed the state to costly international arbitration claims. The most consequential example remains the Reko Diq case: in 2019, an arbitration tribunal awarded Tethyan Copper Company roughly $5.8 billion after Pakistan denied the company a mining lease for the Reko Diq copper and gold project in Balochistan, brought under Pakistan’s investment treaty with Australia. That dispute was eventually settled as part of an agreement to revive the mine, now being developed by Barrick Gold alongside Pakistani federal and provincial entities — but the scale of that arbitration exposure helped drive Pakistan’s broader push to renegotiate or exit older-style BITs.
Why Sweden Specifically Got a Second Look
Sweden’s case stood out for a few reasons. Around 40 Swedish companies currently operate in the Pakistani market, according to Pakistan’s embassy in Stockholm, and the two countries are approaching a significant diplomatic milestone — 2026 marks 75 years since Pakistan and Sweden established formal diplomatic relations. Rather than simply letting the treaty lapse, the cabinet opted to keep the underlying protections in place while modernizing the agreement’s terms — bringing it in line with Pakistan’s current investment protection framework and broader policy objectives, rather than either the older 1981 terms or an abrupt termination.
A Broader European Trade Conversation
The BIT renegotiation wasn’t the only topic raised by Sweden’s ambassador. She also emphasized the importance of continued efforts to advance Pakistan’s commitments under the GSP Plus scheme — the EU’s preferential trade arrangement that gives Pakistan reduced tariffs on exports to European markets, subject to compliance with international conventions on human rights, labour, and governance. Notably, she was the second European ambassador in under three weeks to raise this same point publicly, following similar remarks from the Netherlands’ ambassador — a pattern suggesting European trade partners are collectively keeping pressure on Pakistan to maintain its GSP Plus compliance.
What’s Being Prepared Alongside These Talks
Beyond the Sweden-specific renegotiation, Pakistan has also formed a dedicated committee tasked with reviewing the outcomes of all 25 terminated BITs under the 2021 strategy, assessing whether that strategy and its accompanying “Pakistan Model BIT Template 2021” still fit the current global economic environment. That committee is expected to draft a broader BIT policy addressing investment protection standards, Most Favoured Nation treatment, fair and equitable treatment standards, and dispute resolution mechanisms — meaning the Sweden talks in November may end up being an early test case for a wider policy framework still being finalized.
Final Thoughts
What began as a routine treaty termination notice has turned into a genuine diplomatic and policy exercise — Pakistan walking back a decision, launching a formal review of how it got there, and now preparing to sit down with Sweden in November to build a modernized replacement. With Hungary on a parallel track and a broader BIT policy review already underway, how the Sweden talks unfold could offer an early signal of the framework Pakistan intends to apply across its remaining and renegotiated investment treaties going forward.
