20th May 2026 | Jan Kunstyr | Dispute Resolution, International Law, International Arbitration

Ten years ago, in the autumn of 2016, Jan Kunstyr wrote a client alert about the potential benefits of Brexit for UK-based businesses investing abroad. The argument was simple - outside the EU, the UK would be free to shape its own investment treaty policy, avoid the EU’s proposed Investment Court System, and preserve treaty protections that might otherwise be lost.

A decade later, the picture is mixed but broadly positive. Some opportunities have materialised, particularly through the UK’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”), and its continued support for investor-state arbitration. Others, especially in relation to intra-EU bilateral investment treaties (“BITs”), have narrowed. The result is a more complex but still attractive landscape for UK-based investors.

 

Brexit and Investment Treaty Arbitration: The Initial Concerns

The original article made three main points. First, that the UK, freed from the EU’s exclusive competence over foreign direct investment, would be able to negotiate its own investment protection treaties and free trade agreements more quickly and on its own terms. Second, that the UK could avoid the EU’s proposed Investment Court System (“ICS”), a permanent two-tier tribunal intended to replace the traditional system of international arbitration. The ICS had attracted serious criticism from leading practitioners for its risks of longer proceedings and pro-state bias, since investors would have no role in appointing the decision-makers. Third, that the UK would not have to terminate its BITs with EU Member States (the so-called intra-EU BITs), thereby maintaining an extra layer of protection for UK investors in, particularly Central and Eastern, Europe.

 

How Brexit Reshaped the UK’s Investment Treaty Framework

On the first point, the prediction was largely correct, though the pace was slower than many had hoped. The UK has concluded free trade agreements with more than 60 countries since Brexit, although many were continuity agreements rolling over arrangements previously negotiated by the EU. The more important development, from an investment protection perspective, is the UK’s accession to the CPTPP in December 2024, becoming the first European country to join this major Indo-Pacific trade bloc.

The CPTPP is of particular interest to investment treaty practitioners because its investment chapter provides for a modern and transparent investor-state dispute mechanism, giving UK investors the right to bring claims directly against states.[1] This is a meaningful expansion of the investment protection available to UK businesses operating across the Asia-Pacific region, covering Japan, Singapore, Chile, Vietnam, Peru, Malaysia, Brunei and several other economies.

The UK also signed a landmark free trade agreement with India in July 2025, the most economically significant bilateral deal negotiated from scratch since Brexit. A separate bilateral investment treaty between the UK and India is still being negotiated, but the FTA itself covers services, investment and regulatory cooperation. Negotiations for a new bilateral investment treaty with Singapore were launched in 2023. And as the second-largest BIT network in the world (behind Germany), the UK continues to maintain over 90 bilateral investment treaties in force.[2]

On the second point, regarding the EU’s Investment Court System (“ICS”), the prediction has proven accurate. The UK has not adopted the EU’s proposed ICS. Its treaty practice, including the CPTPP, continues to rely on international arbitration rather than a permanent investment court.

Meanwhile, the EU’s efforts to establish a permanent investment cort through UNCITRAL Working Group III have been in progress since 2017 and remain unresolved. Stakeholder meetings continue to take place, the most recent in January 2026, and key questions around enforcement, financing and the appointment of adjudicators are still being debated. The project also lacks the critical mass of participating states that a multilateral project of this kind requires, with the United States, Japan and others continuing to favour bilateral reform over systemic overhaul. The proposal continues to attract criticism from practitioners who argue that it undermines party autonomy and risks politicising investment dispute resolution. The UK, having chosen a different path, now offers its investors a dispute resolution framework that is familiar, tested and broadly supported by the international arbitration community.

On the third point, the prediction has proved more complicated. In 2016, it seemed possible that the UK, by leaving the EU, could preserve its intra-EU BITs and maintain treaty protection for UK investors in EU Member States. That has only partly happened.

Following the Court of Justice of the European Union’s (“CJEU”) judgment in Achmea v Slovak Republic, investor-state arbitration clauses in intra-EU BITs were held to be incompatible with EU law.[3] most EU Member States signed an agreement terminating their intra-EU BITs. The UK did not sign that agreement, having already left the EU. However, several EU Member States have since terminated their BITs with the UK bilaterally. [4]

The result is that UK investors have lost some treaty protection in Europe, particularly in Central and Eastern Europe.[5] There was also never comprehensive BIT protection between the UK and the larger Western European economies such as Germany, France, Spain and Italy.

The EU-UK Trade and Cooperation Agreement (the “TCA”), which governs the broader post-Brexit relationship, does not fill that gap, as it does not contain the usual substantive investment protections or investor-state dispute settlement mechanism. [6]

That said, the position is not entirely negative. Where UK BITs were terminated bilaterally, their sunset clauses should generally continue to operate in the ordinary way. Many UK BITs contain sunset periods of 15 to 20 years.[7] This means that investors who made qualifying investments while the treaty was still in force may, in principle, continue to benefit from treaty protection for a significant period after termination. For existing investments, the key question is therefore not simply whether the treaty has been terminated, but when the investment was made and whether the sunset clause still applies.[8]

 

New Pressures on the Investment Treaty System

Two important developments since 2016 were not on anyone’s radar when Jan wrote the original article.

The first is the withdrawal of the EU and the UK from the Energy Charter Treaty. The ECT was once one of the most important multilateral investment treaties, particularly for energy investments. Its future is now much less certain. However, its 20-year sunset clause means that existing investments may continue to benefit from protection for some time.[9]

The second is the first ICSID claim brought against the UK.[10] In 2025, Woodhouse Investment Pte. Ltd. and West Cumbria Mining Ltd. commenced proceedings against the United Kingdom under the UK-Singapore BIT, in a dispute concerning a proposed coal mine. The case is a reminder that the UK’s BIT network is not only a tool for UK investors abroad. It also gives foreign investors rights against the UK.

 

Where does this leave UK investors?

The overall position is more favourable than many expected in 2016, but more nuanced than the original prediction suggested.

The clearest opportunity lies outside Europe. The UK’s accession to the CPTPP opens up investment treaty protection across a significant portion of the global economy, with a dispute resolution mechanism grounded in international arbitration rather than any untested court system. UK investors operating in Japan, Vietnam, Malaysia, Singapore, Chile, Peru, Brunei and (once ratification completes) Canada and Mexico now have access to robust treaty-based protections.[11]

There is also a structuring point. The extensive BIT network that the UK built up over decades remains substantially intact. With over 90 BITs in force and a government that continues to support investor-state disputes as a means of protecting outbound investment, the UK is well-positioned as a jurisdiction through which to structure cross-border investments. This is particularly relevant for businesses with operations in higher-risk jurisdictions where the availability of investor-state arbitration can make a meaningful difference to the risk profile of a project.

There is a further practical advantage that is easy to overlook. Since leaving the EU, UK courts are no longer caught between their enforcement obligations under the ICSID and New York Conventions on the one hand and EU law on the other. The enforcement of investment treaty awards in the UK, including awards arising from intra-EU disputes, is now a straightforward matter under the relevant conventions without the complications that EU law previously created.[12]

The main gap is Europe. Some UK-EU BIT protection has been lost, and the EU-UK Trade and Cooperation Agreement does not provide equivalent investment protection. Existing investments may still benefit from sunset clauses, but that requires careful treaty-by-treaty analysis.

Looking ahead, the ongoing negotiations for a UK-India BIT, the new UK-Singapore BIT, the upgraded UK-Republic of Korea FTA concluded in December 2025 (which for the first time includes a full investment protection chapter with investor-state dispute settlement), and the possibility of further trade agreements in the Gulf and South-East Asia all suggest that the UK’s treaty network will continue to grow.

Jan Kunstyr’s client alert in 2016 was not wrong, Brexit did not transform the UK into a perfect investment treaty hub, but it did preserve and create real opportunities.

If you would like to discuss how these developments may affect your business or investment structures, please do not hesitate to get in touch.

 

 

 

[1]  Through the International Centre for Settlement of Investment Disputes (“ICSID”), or using the United Nations Commission on International Trade Law (“UNCITRAL”) ad hoc arbitration rules.

[2] It is worth noting that the UK has not concluded a new standalone BIT since around 2010 (see UNCTAD IIA Navigator, United Kingdom). Instead, the UK’s post-Brexit investment treaty policy has focused on negotiating free trade agreements with investment chapters, such as the CPTPP. Some of the UK’s newer FTAs do not yet include investment protection provisions but contain review clauses contemplating their future inclusion, see https://investmentpolicy.unctad.org/international-investment-agreements/countries/221/united-kingdom.

The UK-Ukraine Political, Free Trade and Strategic Partnership Agreement is a notable example. Its investment chapter includes a review clause under which the parties have agreed to “assess any obstacles to establishment” and “undertake negotiations to address such obstacles, with a view to deepening the provisions of this Chapter and to including investment protection provisions and investor-to-state dispute settlement procedures.” This suggests that the UK sees investment protection as an evolving feature of its FTA programme rather than a precondition for concluding a trade agreement https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/6077/download.

[3] The CJEU reasoned that such clauses were incompatible with EU law because they allowed disputes which might involve the interpretation or application of EU law to be decided by arbitral tribunals outside the EU judicial system. Those tribunals were not able to make preliminary references to the CJEU under Article 267 TFEU, and any subsequent review by national courts was limited. In the Court’s view, that mechanism undermined the autonomy and uniform application of EU law.

[4] NB that under Regulation (EU) No 1219/2012, Member States’ existing BITs with third countries were “grandfathered” and could be maintained until replaced by an EU-level agreement with the same third country. The termination of these BITs with the UK should therefore be understood primarily as a sovereign decision by each Member State in managing its own treaty network, rather than as a direct instruction from the European Commission. That said, the Commission’s broader post-Achmea stance on the incompatibility of investor-state arbitration clauses with EU law, and its willingness to bring infringement proceedings (including, in May 2020, against the UK itself during the transition period), will undoubtedly have informed those decisions.

[5] According to the most comprehensive tracking data, BITs between the UK and Latvia, Croatia, Romania, Estonia, the Czech Republic, Slovakia, Hungary, Malta, Lithuania and Slovenia have all been terminated.

[6] L. Peters and S. Wuschka, “Investment Protection in Post-Brexit EU–UK Relations” (2023) 38(1) ICSID Review 39, at 39–40 and 49–53. The authors note that the TCA focuses on market liberalisation rather than post-establishment protection, containing provisions on market access, national treatment and most-favoured-nation treatment but omitting the substantive standards (FET, expropriation, full protection and security) and investor-state dispute settlement that are standard in investment treaties. The TCA’s dispute settlement mechanism is exclusively state-to-state, with investors limited to amicus curiae submissions.

[7] The UK-Hungary BIT, for example, provides for 20 years of continued protection after termination. The UK-Romania and UK-Croatia BITs similarly provide for 20 years. The UK-Czech Republic and UK-Slovakia BITs provide for 15 years.

[8] The precise cut-off depends on when each treaty was formally terminated, and the position may be complicated in cases where the other State sought to remove or limit the sunset clause prior to termination, as the Czech Republic has done with some of its other BITs. The terms of each termination should therefore be checked carefully. But the general position is that, for existing investments, significant protection remains in place despite the headline terminations.

[9] Individual withdrawals from the ECT took effect as follows: Italy (1 January 2016), France (8 December 2023), Germany (20 December 2023), Poland (29 December 2023), Luxembourg (17 June 2024), Slovenia (14 October 2024), Portugal (2 February 2025), Spain (17 April 2025), and the United Kingdom (27 April 2025). The EU and Euratom withdrawal became effective on 28 June 2025. The Netherlands and Denmark also withdrew. Lithuania notified its withdrawal in August 2025. See Energy Charter Secretariat, Status of the Energy Charter Treaty; European Council Press Release, 27 June 2024.

[10] There are two publicly known investment treaty cases against the UK: Ashok Sancheti v. United Kingdom (2006), brought under the UK-India BIT and terminated by the tribunal in 2009; and Woodhouse Investment Pte. Ltd. and West Cumbria Mining Ltd. v. United Kingdom (ICSID Case No. ARB/25/37), the first ICSID claim against the UK, registered in 2025 under the UK-Singapore BIT. See UNCTAD Investment Dispute Settlement Navigator, https://investmentpolicy.unctad.org/investment-dispute-settlement/country/221/united-kingdom/respondent

[11] The UK already had bilateral investment treaties or FTAs with the majority of CPTPP members prior to accession (including Japan, Australia, Canada, Chile, Mexico, New Zealand, Peru, Singapore and Vietnam). The CPTPP therefore modernises and supplements, rather than creates from scratch, the UK’s investment protection relationships with these countries. See UK Government, “The Accession of the UK to the CPTPP: Agreement Summary” (July 2023).

[12] Peters and Wuschka (n 9), at 53. The authors observe that UK courts before Brexit faced a dilemma in enforcing intra-EU investment awards, caught between their obligations under the ICSID Convention (Article 54 of which leaves no room for judicial review) and the New York Convention on the one hand, and EU law on the other. Post-Brexit, that conflict is resolved. The enforcement of ICSID awards in the UK is now a straightforward matter under the Arbitration (International Investment Disputes) Act 1966. This practical advantage should not be underestimated, particularly given the ongoing difficulties that award creditors face in enforcing intra-EU awards before EU Member State courts.