UK-India Investment Treaty to Allow Companies to Sue Governments

UK and India are finalising an investment treaty that would empower companies to sue governments in case of alleged treaty breaches, according to sources familiar with the negotiations. The provision is expected to be part of a broader Free Trade Agreement (FTA) currently under discussion between the two nations.

The upcoming UK-India treaty will reportedly include an Investor-State Dispute Settlement (ISDS) clause, allowing private investors to take legal action against either government if their rights under the treaty are violated. Such mechanisms are designed to protect businesses from discriminatory or unfair treatment, ensuring greater legal security in cross-border investments.

The framework is intended to attract more foreign direct investment by offering companies a transparent and enforceable dispute resolution process. While this aligns with global investment law practices, critics argue that such clauses can undermine national sovereignty and delay regulatory reforms.

Negotiators are working to balance the governments’ right to regulate in the public interest with the legal protections sought by investors. The final treaty is expected to be announced alongside the broader UK-India FTA, which has seen multiple rounds of negotiation over the past two years.

If implemented, this treaty could reshape investment flows between the two countries and establish one of the most robust legal frameworks for foreign investors in the region.

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