Key takeaways
English Court overrules tribunal on jurisdiction
The Commercial Court found the UNCITRAL tribunal wrongly declined jurisdiction under the UAE–India BIT.
Shareholding qualifies as protected investment
RAKIA’s equity in the joint venture met the BIT’s criteria for investment, despite indirect ownership.
Indirect government actions can trigger treaty claims
The Court confirmed that measures affecting the project—like cancelling supply deals can breach treaty protections, even if the investor isn’t directly targeted.
Ras Al Khaimah Investment Authority -v- Republic of India [2025] EWHC 1553 (Comm)
This was a claim brought by Ras Al Khaimah Investment Authority (RAKIA), the investment arm of the Government of Ras Al Khaimah, UAE against the Republic of India (India) in respect of a cancelled bauxite supply agreement. The claim for over US$270 million was originally brought in UNCITRAL arbitration proceedings pursuant to a bilateral investment treaty (BIT) dated December 2013 between the UAE and India that was intended to facilitate investment and foreign direct investment opportunities between the two countries.
The UNCITRAL arbitral tribunal decided it did not have jurisdiction over the dispute. On appeal, by way of a challenge under s.67 of the Arbitration Act 1996, the Commercial Court disagreed, finding that the tribunal did in fact have jurisdiction to decide the merits of the dispute.
In the Court’s view, the tribunal’s analysis of the dispute settlement provision in the BIT would mean that a major form of investment structure fell outside the compass of the BIT without apparent reason for that choice.
The background facts
Andhra Pradesh Mineral Development Corporation (APMDC) is a company established by the Government of Andhra Pradesh. RAKIA is an investment authority established by the Ras Al Khaimah Government.
In February 2007, the Governments of Andhra Pradesh and Ras Al Khaimah entered into a memorandum of understanding (MOU) for a collaborative project to establish an alumina plant and aluminium smelter in Andhra Pradesh. Pursuant to the MOU, a new company, ANRAK Aluminium Ltd (ANRAK) was set up as a joint venture between RAKIA and an Indian company, Penna Cement Industries Ltd (Penna). Mining leases were granted to APMDC in December 2007.
In August 2008, a Government Order (GOM22) authorised APMDC to enter into a bauxite supply agreement (BSA). In October 2008, APMDC entered into the BSA with ANRAK, pursuant to which it would mine and supply bauxite to ANRAK’s refinery in Andhra Pradesh. APMDC was to obtain all the required forest and environmental clearances from the central government.
ANRAK’s refinery and a power plant were built between 2010 and 2013. However, issues arose because the areas from which APMDC was to mine the bauxite were categorised as “reserved forest.” Due to public concerns and objections from the affected tribal populations, in 2016, the state cabinet of the Government of Andhra Pradesh withdrew its previous approval for bauxite supply to ANRAK and ordered cancellation of the mining leases that had been granted (GOM44).
ANRAK sought to challenge GOM44 in the High Court of Hyderabad. The Court held that GOM44 could not alter GOM22 and related governmental orders that authorised APMDC to enter into the BSA. Nonetheless, APMDC sought to cancel the BSA by sending Show Cause and Termination Letters. ANRAK alleged in the Hyderabad Court proceedings that this cancellation was a repudiatory breach of the BSA.
BIT
In December 2016, RAKIA issued a Notice of Arbitration against India under the BIT. RAKIA relied on Article 10 of the BIT as conferring jurisdiction on the tribunal.
Article 10 (“Settlement of Disputes between Contracting Party and the Investor”) provides in relevant part as follows:
"1. Disputes arising between a Contracting Party and an Investor of the other Contracting Party in respect of an Investment under this Agreement shall be governed by this Article.
2. In the context of Republic of India, this Article shall cover Measures underlying a dispute taken by the Central Government and/or the state governments while exercising their executive powers in accordance with the Constitution of India.
…
4. Any dispute arising between a Contracting Party and an investor of the other Contracting Party in respect of an Investment under this Agreement shall, as far as possible, be settled amicably through negotiations between the parties to the dispute. …
5. If such dispute cannot be settled amicably within a period of six months from the date of receipt of Notice of Dispute, the dispute may be submitted to one of the following dispute settlement mechanisms: …
b. an arbitral tribunal established under the Arbitration Rules of the [UNCITRAL], in force at the time of commencement of the dispute; …".
The arbitration proceedings
RAKIA, as an investor in the aluminium enterprise, alleged that:
the failure to supply ANRAK with bauxite;
GOM 44; and
the cancellation of the BSA in particular,
were governmental acts, attributable as a matter of international law to India, which constituted breaches of a number of the provisions of the BIT. RAKIA claimed damages in the sum of US$273m.
India denied that there were any such breaches and contended that, in any event, the tribunal lacked jurisdiction.
The tribunal decided that, on its true construction, Article 10 applied only when the dispute arose out of measures taken by the Governments of India or Andhra Pradesh and that those measures must have been applied directly to the claimant’s investment.
Assuming that APMDC’s repudiation of the BSA could be treated as an act of the Government of Andhra Pradesh, then it caused loss to ANRAK and thereby diminished the value of RAKIA’s shares in ANRAK. However, in the tribunal’s view, the acts in question had only an indirect effect on (rather than direct application to) RAKIA’s investment and so the tribunal did not have jurisdiction and the claim was dismissed.
RAKIA appealed to the English Commercial Court under s.67 of the Arbitration Act 1996.
The Commercial Court decision
The Court highlighted that the language of bilateral investment treaties may differ from one to the next. The Court focused on the meaning of “Investment” and “Measure” in Article 10 and in the BIT as a whole.
Under this BIT, “Investment” was concerned with assets “invested …in the territory of” the “other Contracting Party.” Article 1(1) of the BIT contained a very broad definition of “Investment” as “every kind of asset invested by the Investors.”
What did RAKIA invest “in the territory of the other Contracting Party” that was an “asset”?? RAKIA did not invest rights under the MOU; it did not have an interest in the refinery and refinery plant that could be described as an asset. Rather, it invested cash contributions of US$42.5 million, the shares in ANRAK and a pledge of those shares to obtain loans, thereby allowing ANRAK to raise further financing.
In the Court’s view, these were all investments in the territory of Andhra Pradesh, and all amounted to “Investment” within the very broad definition in Article 1.1. RAKIA’s incorporation of ANRAK and shareholding in ANRAK was the modality by which RAKIA invested money in the project that the MOU had described and begun, namely, to establish an alumina and aluminium industry in the State of Andhra Pradesh.
As to “Measure”, Article 1(8) provided that “Measure” means “any form of binding action taken by a Contracting Party under any law, rule or regulation and applied directly to an Investment.”
In the Court’s view, GOM44, and possibly also the Show Cause and Termination Letters, were a “binding action” for these purposes. By GOM 44, the Government of Andhra Pradesh was taking binding, executive, action to alter or end the BSA.
The Court also differed from the tribunal in its approach to distinguishing direct application from indirect effect of the Government Measures. In the context of a BIT, this was not about what was directly done to a company and what indirect effect that had on its shareholders. This was not a claim by a company in which an investor had shares. The only relevant claim was that of the investor.
Measures were applied directly to an Investment where they were targeted at the Investment. Here, there was application to the Investment in that the action was applied to the proposed establishment of an alumina and aluminium industry in the State of Andhra Pradesh. And, in GOM 44, the Government of Andhra Pradesh acted directly to end the supply of bauxite and with that the establishment of an alumina and aluminium industry in the State of Andhra Pradesh.
The Court concluded that the tribunal had jurisdiction, although it expressed no view on the merits of the dispute. The substantive dispute will, therefore, be remitted to the tribunal for consideration.
Comment
As India recognised, one area of concern in investment treaty cases is the potential impact of investment treaties on a state’s right to regulate. The Court was mindful of this but also recognised that Article 10 had to be construed in the light of the language used in and the context of this particular BIT.
In the Court’s view, the tribunal’s analysis would result in investors being advised to avoid investing that took the form of establishing and taking shareholdings in companies incorporated in “the territory of the other Contracting Party”. Ultimately, if the parties to a BIT intend for a particular outcome, they will need to express this clearly in their BIT.
