The judgment of Knowles J in Ras Al Khaimah Investment Authority (RAKIA) v Republic of India [2025] EWHC 1553 (Comm) represents a rare and important successful challenge under section 67 of the Arbitration Act 1996 (the “Act”), which permits an aggrieved party to seek a full judicial review of an arbitral tribunal’s substantive jurisdiction. The decision is particularly significant in the investment treaty context, as it confirms that modern bilateral investment treaty (BIT) protections extend to investments structured indirectly through local subsidiaries or joint venture vehicles.
The Facts
RAKIA, the sovereign investment arm of the Emirate of Ras Al Khaimah, invested approximately US$42.6 million in an aluminium refinery and smelter project in the Indian state of Andhra Pradesh, located in a tribal forest area. The investment followed a 2007 memorandum of understanding between the Government of Andhra Pradesh and the Government of Ras Al Khaimah, which contemplated the establishment of an alumina and aluminium industry in the region.
The investment was made through a joint venture company, ANRAK Aluminium Ltd (“ANRAK”), incorporated in March 2007. RAKIA initially held a minority shareholding alongside its Indian joint venture partner, Penna Cement. That shareholding was later diluted after RAKIA ceased making further capital contributions while Penna continued to invest.
A central feature of the project was the Bauxite Supply Agreement (“BSA”) between ANRAK and the state-owned Andhra Pradesh Mineral Development Corporation (“APMDC”). Although construction of the refinery was completed in 2013, political opposition to bauxite mining in tribal forest areas intensified. In 2016, the State issued Government Order G.O.M. No. 44 (“G.O.M. 44”), cancelling earlier governmental approvals underpinning the BSA and issuing instructions that ultimately led APMDC to terminate the agreement. Without access to bauxite, the project became commercially unviable and collapsed.
The BIT Claim
Article 10 of the India–UAE BIT (2013) permits investors to refer disputes to arbitration, provided the dispute relates to a “measure.” Article 1 of the BIT defines a “measure” as a binding action taken by a government that affects an investment.
RAKIA, incorporated in the UAE, commenced arbitration under the BIT seeking approximately US$273 million in damages. It alleged that India’s conduct, including the cancellation of the BSA through G.O.M. 44 and related actions, breached obligations of fair and equitable treatment, protection against expropriation, and full protection and security.
The Tribunal’s Decision
A UNCITRAL tribunal comprising Lord Hoffmann, Justice Chandramauli, and J. William Rowley KC dismissed the claim for lack of jurisdiction. The tribunal accepted India’s argument that the relevant governmental actions did not constitute “measures” applied to RAKIA’s investment. In its view, RAKIA’s protected investment consisted solely of its shareholding in ANRAK.
Because G.O.M. 44 and the subsequent termination instructions were formally addressed to ANRAK and APMDC, rather than to RAKIA itself, the tribunal concluded that any impact on RAKIA’s shareholding was merely indirect. On that basis, it held that the dispute fell outside the scope of the BIT and therefore outside its jurisdiction, without addressing the merits of the claims.
RAKIA challenged that jurisdictional determination before the English High Court under section 67 of the Act.
The Decision of the English Court
Knowles J rejected the tribunal’s approach. Applying Articles 31 and 32 of the Vienna Convention on the Law of Treaties, the Court emphasised that treaties must be interpreted in good faith, in accordance with the ordinary meaning of their terms, read in context and in light of their object and purpose.
The Court held that G.O.M. 44 plainly constituted a “measure” within the meaning of Article 1 of the BIT. It was a binding governmental act that cancelled prior approvals essential to the BSA and set in motion formal instructions requiring APMDC to terminate the agreement. The tribunal’s conclusion that the measure did not bind anyone was, in the Court’s view, both incorrect and unduly narrow. G.O.M. 44 materially altered the legal and commercial position of the parties by triggering the termination process.
The Court further held that the tribunal erred in characterising the effect of the measure on RAKIA as merely indirect. RAKIA’s investment comprised its capital contributions, shares, and pledged shares in ANRAK. By effectively shutting down the underlying project, G.O.M. 44 and the termination correspondence targeted the very enterprise in which RAKIA had invested. While the measures were formally directed at ANRAK and APMDC, their substantive and economic impact was on RAKIA’s investment.
Knowles J rejected the tribunal’s formalistic reasoning. If accepted, that approach would discourage foreign investors from structuring investments through locally incorporated subsidiaries or joint ventures, as treaty protections would be rendered ineffective whenever governmental action was channelled through the host state’s dealings with the local entity. Such an outcome would undermine the purpose of BITs and the protections they are intended to afford.
The Court concluded that the tribunal had erred in law and exceeded its jurisdictional limits. The award was set aside under section 67 and the dispute was remitted to the tribunal for determination on the merits.
Comment
The judgment underscores that BITs must be interpreted by reference to economic reality rather than narrow formalism. It provides reassurance to investors who structure their investments through joint ventures or subsidiaries, confirming that treaty protection is not lost simply because the host state’s measures are formally directed at the local operating company.
Although successful section 67 challenges remain rare, the decision illustrates that English courts will intervene where tribunals adopt an overly restrictive approach to jurisdiction that risks hollowing out the substantive protections promised by investment treaties.