When Ambition Outpaces Architecture: Filling the Investor Protection Vacuum in the India-UK Comprehensive Economic and Trade Agreement

On 5 June 2026, the Chief Justice of India (“CJI”) stood in London and told a room of arbitration practitioners something that deserved more attention than it received. A trade corridor, he said, is strengthened not merely by the movement of goods and capital, but by the certainty that when things go wrong, investors will not be "priced out, delayed out, or forced into a process that had no real power to choose". In July 2025, India and the United Kingdom (“UK”) had signed the India-UK Comprehensive Economic and Trade Agreement (“CETA”), spanning 29 chapters, covering goods, services, digital trade, and government procurement, and sitting atop a bilateral relationship valued at over sixty billion dollars annually. Yet Chapter 29 of that agreement, which governs dispute resolution, offers a UK investor who suffers arbitrary regulatory action by the Indian state precisely one option: convince the UK government to fight their battle diplomatically. This post argues that the CETA's total exclusion of investor-State dispute settlement (“ISDS”) has created a structural protection vacuum, and that India's own treaty practice already holds the blueprint to fill it. To that end, this post first examines the operational limitations of Chapter 29’s State-to-State dispute settlement mechanism and the procedural hurdles within Indian domestic litigation. It then demonstrates how this legal vacuum disproportionately harms mid-market commercial actors, before examining India’s recent treaty precedent, specifically the 2024 India-UAE Bilateral Investment Treaty (“BIT”), to propose a tiered, fast-track ISDS framework for the ongoing India-UK BIT negotiations.

Chapter 29: A Ledger for Sovereigns, Not a Shield for Investors

Chapter 29 of the CETA introduces a dispute settlement mechanism built exclusively for States. Article 29.4 limits standing to governments alone. The process moves slowly by design: a mandatory sixty-day consultation window opens first, followed by an optional mediation mechanism under Article 29.6 that either party may terminate at will. If consultations break down, a three-member panel is constituted to issue a binding decision. What is absent from this framework, however, carries more weight than what is present. There is no investor-State dispute settlement. A private UK entity has no direct access to any remedy under the treaty. There is no provision for interim relief to stop ongoing commercial harm while proceedings run. And under Article 29.15, even a successful panel ruling produces only the suspension of trade concessions, a measure directed at the opposing State's exporters broadly, not at compensating the investor who was harmed.

Running alongside this is a separate problem. The BIT between India and the UK, which would ordinarily carry the investment protection missing from the CETA, remains under negotiation with no confirmed timeline. Consequently, the commercial framework under the CETA has taken effect without a binding bilateral investment protection mechanism in place to safeguard private cross-border investments.

Why State-to-State Dispute Settlement Does Not Work for Private Investors

The structural failure of state-to-state mechanisms for private investor disputes is not a theoretical concern. The White Industries Australia Limited v Republic of India arbitration made it concrete. In 1989, White Industries, an Australian mining company, contracted with Coal India Limited, a State-owned entity, to develop the Piparwar coal mine. Disputes over penalty and bonus payments were referred to ICC arbitration, which ruled in White Industries' favour on 27 May 2002. When White Industries moved to enforce that award, Coal India simultaneously applied to have it set aside, and the resulting proceedings ricocheted between the Calcutta and Delhi High Courts for nearly nine years. The Australian government never stepped in diplomatically. What ultimately worked was not statecraft but legal ingenuity: the invocation of the Most-Favoured-Nation clause in the India-Australia BIT to import the "effective means" standard from the India-Kuwait BIT, eventually bringing the dispute before a separate UNCITRAL tribunal that ruled in White Industries' favour.

The message from that case is plain. States do not fight for companies, particularly smaller ones, when the geopolitical cost is high. A UK investor facing arbitrary regulatory action under the CETA has no comparable route available. Because Chapter 29 is strictly State-to-State and contains no investor-State MFN clause, a private investor cannot import direct arbitration rights or procedural protections from India's other BITs, leaving them entirely dependent on their home States' willingness.

The Chapter 29 timeline reinforces this concern. 60 days of consultations, 150 days of panel deliberation, and a 15-month compliance window produce a minimum baseline of over two years before any resolution. For a business absorbing ongoing commercial losses, that is not a remedy.

The Domestic Court Route Offers No Comfort Either

Without ISDS, UK investors are left with Indian domestic courts, and two recent Supreme Court rulings make clear what that means in practice. In Disortho S.A.S. v Meril Life Sciences, the Court held that where a contract is governed by Indian law, a strong presumption follows that Indian law also governs the arbitration clause, even where the contractual seat is abroad. A UK investor who structured its contract around a London-seated arbitration may find that process pulled back into Indian jurisdictional oversight at the enforcement stage. In Gayatri Balasamy v ISG Novasoft Technologies, the Court established an all-or-nothing rule: Indian courts may only uphold or entirely set aside an arbitral award. There is no power to modify. A minor procedural flaw does not invite correction. It invites annulment, sending the investor back to the beginning of proceedings that may have already run for years.

These rulings are not anomalies. They reflect the same structural unpredictability that turned White Industries' enforcement dispute into a nine-year ordeal. Compounding the picture, the Kluwer Arbitration Blog's 2025 India year-in-review observes that anticipated amendments to India's Arbitration and Conciliation Act 1996 have seen "little progress," with the Ministry of Law and Justice missing its own revision deadlines. The domestic reform path offers no near-term solution.

The Missing Middle: Who the Vacuum Actually Hurts

The Chief Justice did not describe the future of Indo-UK trade as a story about conglomerates. He described it as pharmaceutical suppliers, fintech firms, clean energy businesses, digital platforms, and mid-market manufacturers. These are precisely the actors for whom state-to-state dispute settlement is not helpful. As he put it: 

"If our ADR mechanisms work only for disputes large enough to justify high fees or large legal teams, that might fail the very commercial partnerships that are meant to support."

A mid-sized UK pharmaceutical company enters the Indian market on the strength of the CETA's preferential access commitments. It invests substantially in local manufacturing. Its operating licence is then cancelled following a regulatory policy shift. It cannot sustain nine years of Indian court proceedings. It cannot compel its government to raise a formal panel dispute over a 60-billion-dollar relationship. Its dispute value, perhaps five to eight million dollars, sits below the threshold that makes traditional arbitration commercially viable for most counsel. This company sits in the exact gap the CETA creates: too small for diplomacy, too foreign for domestic courts, and too commercially exposed to simply absorb the loss.

India Has Already Walked the Middle Path

The exclusion of ISDS from the CETA is not driven by principle. It is contradicted by India's own recent conduct. The 2024 India-UAE BIT includes a limited ISDS clause, conditioned on a mandatory three-year local remedy exhaustion period before international arbitration becomes available. This is not a surrender of sovereignty. It is a calibrated arrangement that balances investor certainty against state autonomy, and India has already agreed to it in the India-UAE BIT. The CETA instead followed the more restrictive template of India's agreements with the EFTA states, despite the UK relationship being substantially larger in both commercial scale and strategic weight.

The India-UK BIT negotiations now present the immediate opportunity to correct this. The proposal here draws on the UAE's precedent and the CJI's own recommendations for the Indo-UK commercial relationship: disputes below a defined threshold, suggested at USD ten million, should qualify for a fast-track investor-state procedure administered by a jointly accredited Indo-UK arbitration panel. Proceedings would be document-heavy, with online hearings where appropriate, capped fees, and a defined 12- to 18-month resolution timeline. Disputes above that threshold remain in the State-to-State framework. India retains its sovereignty shield for large-scale investment disputes. Mid-market investors get a forum with real teeth. The CJI's missing middle finds an institutional home. This is not asking India to walk back its post-White Industries caution. It is asking India to extend to its most significant trade partner the same calibrated framework it has already offered elsewhere.

Conclusion

If the India-UK BIT concludes without a tiered investor protection mechanism, the CETA will have generated enormous commercial velocity with no safety net for the actors driving it. The Chief Justice's London address will remain a vision without the architecture to support it. Commercial confidence in a trade corridor is not built by tariff schedules alone. It is built by the knowledge that when investments go wrong, a forum exists with the real power to fix them. India has shown it can hold sovereignty and investor trust in balance. Failing to extend that balance to the UK means leaving behind the mid-market enterprises the CJI placed at the centre of Indo-British trade's future. Ambitions are realised in contracts, not in communiqués. The India-UK BIT is where that contract must be written, and it must be written for those who need it most.