UK Court of Appeal rejects India's challenge to arbitration over Andhra Pradesh bauxite project

The Court of Appeal of England and Wales has ruled against India in a dispute over whether a UAE investment authority can pursue arbitration over a failed bauxite mining project in Andhra Pradesh.

The Court upheld an earlier ruling allowing Ras Al Khaimah Investment Authority (RAKIA) to proceed with its claims against India under the India-UAE Bilateral Investment Treaty (BIT).

A Bench of Lord Justices Males, Phillips and Miles dismissed India's appeal against a June 2025 judgment of the English High Court, which had overturned an arbitral tribunal's finding that it lacked jurisdiction to hear the dispute.

The Court held that the government action directed at a company could qualify as action directly affecting a foreign investor's investment, even when the investment was held through a minority shareholding.

"It follows that, for the purposes of the BIT, a minority shareholding allocated to an Investor in exchange for capital investment in a company is not regarded as just an interest in the company," Lord Justice Phillips observed,

The dispute arose from a 2007 memorandum of understanding between the Government of Andhra Pradesh and the Government of Ras Al Khaimah to establish an alumina refinery, aluminium smelter and power plant in Andhra Pradesh.

RAKIA invested approximately $42.5 million in ANRAK Aluminium Limited, which was incorporated to implement the project. Its shareholding was subsequently diluted to approximately 12%.

The project depended on bauxite supplies from the state-owned Andhra Pradesh Mineral Development Corporation (APMDC).

However, following public protests, the Andhra Pradesh government reversed its position in 2015 and subsequently withdrew the orders authorising the bauxite supply arrangement. APMDC eventually terminated the supply agreement.

RAKIA initiated arbitration against India in December 2016, alleging violations of the investment treaty, including failure to provide fair and equitable treatment and unlawful expropriation.

In May 2022, an arbitral tribunal comprising Lord Hoffmann, Justice Chandramauli and J William Rowley QC ruled that it lacked jurisdiction.

The tribunal reasoned that the government measures directly affected ANRAK and APMDC, while their impact on RAKIA's shareholding was merely indirect.

However, Justice Robin Knowles of the English High Court overturned that finding in June 2025, prompting India's appeal.

Before the Court of Appeal, India argued that RAKIA's protected investment consisted of its shares in ANRAK rather than the underlying aluminium project. Consequently, measures affecting the project or its supply arrangements could not be regarded as directly applied to RAKIA's investment.

Rejecting this argument, the Court held that the treaty required investments to be understood in their economic context rather than merely as the legal instruments through which they were held.

"That reading of the BIT makes sense of and gives meaning to the protections given to Investments in its substantive provisions," the Court explained.

It further observed that India's proposed interpretation could substantially undermine the protections contemplated under the treaty.

The Court also rejected India's reliance on the circumstances surrounding the negotiation of the treaty, including India's response to the adverse arbitral award in White Industries v India.

However, the Court disagreed with the High Court's suggestion that the distinction between direct and indirect application of government action depended on whether such action was specifically targeted at an investment.

It clarified that the treaty excluded merely indirect or consequential effects of government action directed elsewhere.

Applying this interpretation, the Court concluded,

"I therefore agree with the Judge that the actions of the GoAP in the present case applied directly to RAKIA’s Investment."

The Court held that the government's actions had ended the availability of the project's primary bauxite supply and led to the termination of the supply agreement.

The dispute will now proceed before the tribunal for determination on merits as regards whether India breached the treaty or owes compensation to RAKIA.

India was represented by Sam Wordsworth KC, Siddharth Dhar KC and Peter Webster, instructed by Dentons UK and Middle East LLP.

RAKIA was represented by Tim Otty KC, Ben Juratowitch KC and Benedict Tompkins, instructed by Freshfields LLP.

[Read Judgment]