UK Court of Appeal: India RAKIA Arbitration Can Proceed

• The UK Court of Appeal ruled against India, allowing Ras Al Khaimah Investment Authority (RAKIA) to pursue arbitration.
• RAKIA's claims stem from a failed bauxite mining project in Andhra Pradesh and are brought under the India-UAE Bilateral Investment Treaty.
• The Court upheld an English High Court decision that had overturned an arbitral tribunal's finding of no jurisdiction.
• The ruling clarifies that government actions affecting a company can directly impact a foreign investor's minority shareholding.
• RAKIA had invested $42.5 million in ANRAK Aluminium Limited for the project, with its shareholding later diluted to about 12%.

The Court determined that governmental actions directed at a company can indeed constitute actions directly impacting a foreign investor's investment, even when that investment is held through a minority shareholding.

The UK Court of Appeal has delivered a significant ruling against India, affirming the right of a United Arab Emirates investment authority to pursue arbitration concerning a failed bauxite mining project in Andhra Pradesh. This decision allows the Ras Al Khaimah Investment Authority (RAKIA) to proceed with its claims against the Indian state, which are brought under the provisions of the India-UAE Bilateral Investment Treaty (BIT).

Specifically, a panel comprising Lord Justices Males, Phillips, and Miles dismissed India's appeal. This appeal sought to overturn a June 2025 judgment from the English High Court. The High Court's earlier ruling had itself reversed an arbitral tribunal's initial finding that it lacked the necessary jurisdiction to hear the dispute, thereby clearing the path for the arbitration to move forward.

A central tenet of the Court of Appeal's judgment is its clarification on the scope of investor protection, particularly for minority shareholdings. The Court determined that governmental actions directed at a company can indeed constitute actions directly impacting a foreign investor's investment, even when that investment is held through a minority shareholding. This interpretation broadens the circumstances under which investors can seek redress under international treaties.

Lord Justice Phillips articulated this principle, observing that, for the purposes of the Bilateral Investment Treaty, a minority shareholding allocated to an investor in exchange for capital investment in a company is not merely considered an interest in the company itself. This ruling effectively strengthens the position of foreign investors by recognizing that indirect impacts on their corporate vehicles can still trigger treaty protections, thereby overcoming potential arbitral tribunal jurisdiction challenges based on the nature of the shareholding.

The origins of this dispute trace back to a memorandum of understanding signed in 2007 between the Government of Andhra Pradesh and the Government of Ras Al Khaimah. This agreement aimed to establish a comprehensive industrial complex in Andhra Pradesh, including an alumina refinery, an aluminium smelter, and a power plant, signaling a significant foreign investment into the region.

RAKIA subsequently invested approximately $42.5 million into ANRAK Aluminium Limited, the entity specifically incorporated to execute this ambitious project. Over time, RAKIA's initial shareholding in ANRAK Aluminium Limited was diluted, eventually settling at approximately 12%. The viability and success of the entire project were critically dependent on securing reliable supplies of bauxite, a key raw material for alumina production.

Lawyers advising foreign investors in India should note this ruling clarifies that government actions impacting a company can directly affect a foreign investor's minority shareholding under a Bilateral Investment Treaty, expanding the scope of investor protection and the enforceability of arbitration clauses against state challenges.

Source: Original reporting via legal news outlet