UK Court Rules Against India in RAKIA Investment Dispute

The English Court of Appeal has rejected India's appeal concerning a dispute related to Ras Al Khaimah Investment Authority (RAKIA) under the India-UAE Bilateral Investment Treaty. This decision follows an earlier ruling that allowed the dispute to proceed before an arbitral tribunal.

The conflict centres on a canceled bauxite supply agreement linked to an aluminium project in Andhra Pradesh, involving RAKIA and the Penna Group. India's efforts to challenge the arbitral tribunal's jurisdiction were dismissed, allowing RAKIA's claims to advance.

In 2007, a memorandum of understanding was signed between the Government of Andhra Pradesh and the Government of Ras Al Khaimah, facilitating the establishment of an alumina refinery, aluminium smelter, and power plant. RAKIA invested approximately $42.5 million in ANRAK Aluminium Limited, which was created to implement this project. Over time, RAKIA's share in the project was diluted to about 12% after public protests prompted a reversal in the state government's position in 2015, leading to the termination of the bauxite supply agreement by Andhra Pradesh Mineral Development Corporation (APMDC).

RAKIA initiated arbitration against India in December 2016. They alleged violations of the investment treaty, claiming that India failed to provide fair treatment and unlawfully expropriated RAKIA's investment. An arbitral tribunal initially ruled in May 2022 that it lacked jurisdiction over the matter, stating that the government actions primarily affected ANRAK and APMDC, with only indirect implications for RAKIA.

However, in June 2025, the English High Court overturned this decision. The High Court asserted that government actions targeting a company could impact a foreign investor's interests, regardless of the shareholding structure. India argued that RAKIA’s investment was limited to its shares in ANRAK, downplaying the significance of project-oriented decisions. The Court of Appeal, however, maintained that the India-UAE Bilateral Investment Treaty must be viewed within its economic context, preserving the protections afforded to investments.

The Court also rejected India's interpretation of the treaty that only direct government actions aimed specifically at RAKIA’s investment should be considered. Instead, the Court articulated that the treaty covers actions that directly impact the broader investment context.

As a result, the dispute is set to proceed before the arbitral tribunal, which will examine whether India breached the treaty and if compensation is owed to RAKIA. Legal representatives for India and RAKIA included notable figures from well-known law firms Dentons and Freshfields, respectively.