UK-India treaty with ‘corporate courts’ shows a government “at odds with the times”, campaigners say
Global Justice Now | 6 May 2025
UK-India treaty with ‘corporate courts’ shows a government “at odds with the times”, campaigners say
Campaigners warn new deal could pose threats to climate action and medicine prices; claims of hypocrisy after UK withdrew from a similar deal last year
As the UK-India FTA is signed, campaigners have warned a parallel treaty could contain provisions which would allow corporations investing in both countries the power to sue the British and Indian governments.
The UK-India bilateral investment treaty (BIT) will accompany the new Free Trade Agreement (FTA) announced today. The parallel investment treaty is rumoured to contain the controversial Investor-State Dispute Settlement (ISDS) mechanism, dubbed “corporate courts” by campaigners.
ISDS enables multinational companies to sue governments in bespoke tribunals outside national legal systems, over policies they perceive to damage the value of their investments. In these claims, businesses have challenged everything from increases to the minimum wage to health legislation for plain packaging cigarettes to windfall taxes.
Previously, India terminated a large number of its BITs after facing many ISDS claims. Of a total of 30 cases India has faced, 8 were raised by UK corporations under the previous 1994 India-UK BIT, which was terminated by India in 2017. UK investors are the third most frequent users of ISDS, raising grave concerns over India’s policy space.
Meanwhile longstanding concerns exist over the use of ISDS litigation by fossil fuel companies to challenge climate policy. In 2023, the previous Conservative government exited the Energy Charter Treaty – which contains ISDS – citing its risk to the UK’s ability to reach net zero. Fossil fuel companies are the strongest users of ISDS: making a staggering £286.5 billion in claims since 1998.
Elsewhere, the UN Special Rapporteur on human rights and the environment recently warned of the “catastrophic consequences for the environment and human rights” that ISDS poses, stating that it represents a “daunting obstacle” to governments’ climate plans. UN climate scientists in the 2022 IPCC report also warned of the “regulatory chill” generated by the threat of claims, which dissuade governments from taking essential climate action for risk of invoking an ISDS claim.
ISDS claims also pose risks to the costs of lifesaving medicines, including to the NHS, as it would give pharmaceutical corporations additional power to challenge decisions on patent renewal. India has traditionally kept prices for medicines lower precisely by preventing the so-called ‘evergreening’ of patents. Sourcing from India has saved the NHS substantial sums.
The deal poses potential risks to the UK too, campaigners warn. Essar Oil is the 4th quickest growing company with Indian investment in the UK. Campaigners state there is now risk that the company could use ISDS to frustrate the UK’s net zero ambitions.
Cleodie Rickard, trade campaign manager at Global Justice Now said:
“Signing an investment deal with India which gives corporations the power to sue our countries shows a government at odds with the times. Last year, the Conservative government withdrew from an ISDS deal, the Energy Charter Treaty, citing its risks to the UK’s net zero goals. Now Starmer’s government is pulling us a step back into this outdated system, and subjecting India to the same – it’s hypocrisy. Countries from Indonesia to South Africa have terminated ISDS deals, while Australia and New Zealand have pledged not to include it in future trade agreements. It is highly concerning that this is a priority for the UK, when it is widely accepted ISDS ties governments’ hands to enact the policies we need to face today’s crises. This treaty cannot go ahead, and MPs should reject it.”
Tom Wills, director of the Trade Justice Movement said:
“This deal gives Indian and British companies the power to override democratic decision-making, potentially obstructing efforts to achieve net zero and tackle inequality in both countries. It contains nothing that will support higher standards of environmental or human rights protection. And unless the UK reforms its parliamentary processes quickly, it will be pushed through without any opportunity for MPs to amend or reject it. The Labour government came into power promising a change in trade policies. But this deal looks like more of the same: a rush into a low standards agreement which does nothing for workers or ordinary people.”
