The UK has, historically, been a relative bystander in the world of investor–state arbitration. Despite being a party to over 400 bilateral investment treaties, the UK has faced very few investor–state claims and, until recently, had never faced a claim under the ICSID Convention.

However, in recent years, the UK has appeared with more prominence on the investor–state arbitration stage. Notably, the UK is currently facing its first-ever ICSID claim, in relation to the UK High Court’s decision, pursuant to claims brought by two environmental groups, to quash planning permission approval for a coal mining project. The UK’s pro-environmental stance, evidenced also by its exit from the Energy Charter Treaty (ECT), may lead to further such disputes.

The UK is also establishing itself as a favourable seat and place for enforcement in investor–state arbitration, especially for intra-EU investors. Recent decisions of the UK courts have confirmed that the UK will honour its obligations under the ICSID Convention, rather than follow the primacy of EU law established by the Court of Justice of the European Union (CJEU) in Slovak Republic v Achmea.

UK Faces Its First ICSID Claim

On 8 August 2025, Singaporean company Woodhouse Investment and its subsidiary, UK company West Cumbria Mining (Holdings), registered the first ICSID claim against the UK. The claim was filed under the Singapore–UK bilateral investment treaty.

Currently, there are no publicly disclosed documents regarding the ICSID claim. However, the claim relates to a publicly available decision of the UK High Court, in which it quashed the claimants’ original approval for planning permission for their coal mining project, discussed below.

Background to the claim

West Cumbria Mining Limited (“West Cumbria Mining”) – a wholly owned subsidiary of West Cumbria Mining (Holdings) – applied for planning permission for a new underground coal mine in Whitehaven, Cumbria, on 31 May 2017. The application was for the mining and processing of over 60 million tonnes of metallurgical coal, to take place between 2025 and 2049.

Between 7 September 2021 and 1 October 2021, a public inquiry into the planning application took place. Two environmental groups, Friends of the Earth Limited (“Friends of the Earth”) and South Lakeland Action on Climate Change – Towards Transition (SLACC), took an active role in the public inquiry, opposing West Cumbria Mining’s application.

On 7 December 2022, the Secretary of State for Levelling Up, Housing and Communities (“Secretary of State”) granted West Cumbria Mining’s application. Subsequently, Friends of the Earth and SLACC each brought a claim under the Town and Country Planning Act 1990 to have the Secretary of State’s decision quashed. In addressing those claims, the UK High Court emphasised that it was not hearing an appeal on the merits of the Secretary of State’s decision, but rather conducting a judicial review of the decision to determine whether the Secretary of State acted within the limits of his legal powers. Specifically, the UK High Court focused on the alleged unlawfulness of the way in which the Secretary of State addressed the end-use greenhouse gas emissions (ie, the emissions from the combustion of the extracted coal) from the project.

In his decision of 13 September 2024, Mr Justice Holgate of the UK High Court relied on the UK Supreme Court’s decision in R (Finch) v Surrey County Council of 20 June 2024. In that decision, the Supreme Court – when determining whether end-use greenhouse gas emissions should have been included in an oil extraction project’s environmental impact assessment (EIA) – ruled that whether such greenhouse gas emissions were an effect of an oil extraction project was a question of legal causation and that, in the circumstances of that case, the legal causation test had been met and thus the end-use emissions should have been considered in the EIA.

Mr Justice Holgate, applying the Supreme Court’s reasoning in Finch, found that “the burning of the Whitehaven coal is an inevitable consequence of its extraction from the mine” and thus “it is plain … that the [greenhouse gas] emissions from the combustion are significant likely indirect effects of the project the subject of the planning application”. Accordingly, Mr Justice Holgate considered that the EIA should have assessed those end-use emissions and their implications, which he deemed to be “an obviously material consideration which the Secretary of State was obliged to take into account in the determining of the planning application”.

West Cumbria Mining’s position was that, even if the end-use greenhouse gas emissions were an effect of the coal extraction project, the effect was not significant because an equivalent amount of coal in the USA would remain in the ground, and thus there would be no increase in end-use emissions. However, Mr Justice Holgate found that such argument could only succeed if there would be perfect or near-perfect substitution for the US coal, and the Secretary of State had found only that there would be partial substitution. Accordingly, Mr Justice Holgate quashed the Secretary of State’s decision to approve the planning application.

In his reasoning, Mr Justice Holgate also referred to the UK’s global leadership role in promoting international action on climate change and its commitment to achieve net zero by 2050 pursuant to the Climate Change Act 2008.

In April 2025, following Mr Justice Holgate’s decision, West Cumbria Mining withdrew its application for planning permission. Woodhouse Investment and West Cumbria Mining (Holdings) submitted their ICSID claim several months later.

Potential future implications of the claim

West Cumbria Mining (Holding)’s ICSID claim against the UK follows an evolving trend of investor–state arbitrations arising due to state conduct, driven by environmental concerns, that may violate treaty obligations to investors.

The UK High Court’s decision relating to West Cumbria Mining’s planning application, as well as the UK Supreme Court’s decision in Finch, signifies that the UK is willing to strictly vet – and deny – planning applications for mining (and other) projects where such projects do not satisfy environmental regulations. Such conduct could potentially lead to future investment treaty claims initiated by investors that claim to have had their legitimate expectations frustrated, or their right to a specific project expropriated. Whether such claims are likely to succeed, including West Cumbria Mining (Holdings)’s claim, is yet to be seen.

Nevertheless, the UK – particularly given its global leadership role in promoting international action on climate change and its commitment to achieve net zero by 2050 – must cross a precarious tightrope in adhering to its environmental commitments while ensuring it does not breach its investment treaty obligations.

Relatedly, although outside of the investor–state arbitration sphere, Lord Neuberger – former president of the UK Supreme Court – recently issued an award in relation to the Welsh government’s decision to ban onshore petroleum extraction in 2018 (such powers having been devolved by the UK government to the Welsh government earlier that year). Lord Neuberger acted as sole arbitrator, in an arbitration brought by UK Onshore Gas Limited and other UK companies under petroleum exploration and development licences they hold for coal bed methane and shale gas deposits in South Wales. Details of the partial award are not publicly available, as it is exempt from disclosure under the UK’s Environmental Information Regulations. However, the partial award is reported to be in favour of the Welsh government and is allegedly being challenged by the claimants in the UK courts.

UK’s exit from the Energy Charter Treaty

On 27 April 2025, the UK signalled further its commitment to achieving net zero when it officially exited the ECT. In April 2024, when the UK submitted formal notification that it would be withdrawing from the ECT, then UK Minister of State for Energy Security and Net Zero, Mr Graham Stuart, explained that the departure from the ECT was to “support the UK’s transition to net zero and strengthen its energy security”.

However, by leaving the ECT, the UK has not protected itself entirely from claims under the Treaty. Under the ECT’s sunset clause, existing investments in the UK will continue to be protected under the ECT for 20 years, until 2045, just five years prior to the UK’s deadline to reach net zero.

Despite the UK’s unique position in the EU’s investor–state arbitration landscape, as discussed below, the UK’s departure from the ECT aligns with the EU’s position, and follows a recent exodus from the ECT by several EU member states, including France, Germany and Spain. In fact, at the same time that the UK notified its intent to withdraw from the ECT, the European Parliament voted 560 to 43 in favour of the European Commission’s proposal for a “co-ordinated withdrawal” of EU member states from the ECT.

UK’s Role in the EU’s Investor–State Arbitration Landscape

The landscape of investor–state arbitration within the EU shifted significantly in 2018 when, in Slovak Republic v Achmea, the CJEU ruled that intra-EU investment arbitration was contrary to EU law. That decision came just under two years after the UK had voted to leave the EU. On 31 January 2020, the UK formally exited the EU.

As discussed below, the UK courts – both before and after the UK’s exit from the EU – have adopted pro-investor decisions that run contrary to rulings of the European courts and show the UK’s commitment to honouring its obligations under the ICSID Convention. In doing so, the UK is now arguably a favourable seat and place of enforcement for investors, particularly in intra-EU investor–state arbitrations.

CJEU rules UK Supreme Court infringed EU law by lifting the stay of enforcement in Micula v Romania

The Micula saga has been ongoing for over two decades. On 2 August 2005, the Micula brothers (and other affiliated claimants) filed a request for arbitration against Romania. The Micula brothers are Swedish nationals, thus making Micula an intra-EU arbitration. The Micula brothers’ claim relates to Romania’s repeal, prior to its accession to the EU, of a regional aid scheme in the form of tax incentives. On 11 December 2013, the tribunal in the Micula investment arbitration found that Romania had failed to provide fair and equitable treatment to the Micula brothers and awarded damages of approximately RON792 million (GBP135 million).

In 2015, the European Commission ruled that if Romania paid the award, it would constitute illegal state aid under EU law. That decision was annulled in 2019 by the General Court of the EU on the basis that the award concerned issues pre-dating Romania’s accession to the EU. The CJEU quashed the General Court’s decision in 2022.

In 2014, the Micula brothers registered their award in the UK. Romania obtained a stay of enforcement from the UK Commercial Court in 2017, which the UK Court of Appeal upheld in 2018 pending the aforementioned decision of the General Court of the EU. The proceedings then went before the UK Supreme Court. This was during the “transition period” for the UK’s exit from the EU, during which – pursuant to the UK’s withdrawal agreement – EU law continued to apply in and to the UK. On 19 February 2020, the UK Supreme Court overturned the Court of Appeal’s decision and ordered enforcement of the Micula award.

In summary, the UK Supreme Court held that the existence and extent of the UK’s obligations stemming from the ICSID Convention were not governed by EU law pursuant to Article 351 of the Treaty on the Functioning of the European Union (TFEU), and that the issue before it (being the UK’s obligations under the ICSID Convention) was different from the issue before the EU courts.

In response to the UK Supreme Court’s decision, the European Commission initiated proceedings against the UK before the CJEU. The UK did not participate in the proceedings. On 14 March 2024, the CJEU ruled that the UK Supreme Court had infringed EU law by lifting the stay of enforcement in Micula in its 19 February 2020 decision. Specifically, the CJEU found:

• Article 351 TFEU could not be relied upon by the UK with respect to its obligations under the ICSID Convention because no rights of non-EU member countries were involved.
• The UK Supreme Court infringed Article 4(3) of the Treaty on European Union (TEU) (principle of sincere co-operation) when ruling on the interpretation of Article 351 TFEU.
• The UK Supreme Court infringed Article 267 TFEU by not referring to the CJEU for a decision on the interpretation of Article 351 TFEU.
• The UK Supreme Court infringed Article 108(3) TEU when lifting the stay on enforcement, which rendered the Micula award enforceable and payable and thus had the effect of ordering Romania to breach its obligations under EU law regarding state aid.

The CJEU ordered the UK to pay the costs of the proceedings. In light of the UK’s decision not to participate, it appears unlikely it will do so, particularly given that the transition period has ended and the UK is no longer subject to EU law.

UK Court of Appeal, in Infrastructure Services v Spain, rejects Spain’s defence of state immunity

In Infrastructure Services Luxembourg SARL and another v The Kingdom of Spain, the ICSID tribunal found that Spain had breached its obligations under the ECT and awarded damages of approximately USD125 million in its award dated 15 June 2018.

On 29 June 2021, the UK courts ordered registration of the award as if it had been a judgment of the High Court. Spain applied to set aside the order. On 25 May 2023, that application was dismissed. Spain appealed that decision before the UK Court of Appeal on the basis that neither the ICSID Convention nor the UK Arbitration Act deprives foreign states of their immunity from the adjudicative jurisdiction of the UK courts pursuant to Section 1(1) of the State Immunity Act (SIA). Further, Spain argued that Article 54 of the ICSID Convention does not constitute Spain’s prior written agreement to submit to the jurisdiction of the UK courts with respect to ICSID proceedings.

Section 1(1) (general immunity from jurisdiction) of the SIA provides:

“A State is immune from the jurisdiction of the courts of the United Kingdom except as provided in the following provisions of this Part of this Act.”

Section 2 (submission to jurisdiction) of the SIA provides:

“(1) A State is not immune as respects proceedings in respect of which it has submitted to the jurisdiction of the courts of the United Kingdom.

(2) A State may submit after the dispute giving rise to the proceedings has arisen or by a prior written agreement; but a provision in any agreement that it is to be governed by the law of the United Kingdom is not to be regarded as a submission.”

Finally, Article 54(1) of the ICSID Convention provides:

“Each Contracting State shall recognize an award rendered pursuant to this Convention as binding and enforce the pecuniary obligations imposed by that award within its territories as if it were a final judgment of a court in that State.”

The Court of Appeal dismissed Spain’s appeal, holding that Article 54(1) of the ICSID Convention is “clearly an agreement by Contracting States… to waive immunity and submit to the jurisdiction of the courts of the United Kingdom… sufficient for section 2(2) of the SIA”. Accordingly, the Court of Appeal ruled that Spain could not rely on state immunity as a defence to the enforcement of the ICSID award in the UK.

Conclusion

In summary, the decisions of the UK courts in both Micula and Infrastructure Services have confirmed the UK’s commitment to honouring its obligations under the ICSID Convention. Investors can seek enforcement of intra-EU awards in the UK without facing the hurdle of the primacy of EU law, while investors can also be confident that the UK will not allow state immunity as a defence to enforcement of ICSID awards.