In August 2025, for the second time in its history, the UK government was sued by a foreign investor under investor-state dispute settlement (ISDS) provisions, through the 1975 UK-Singapore bilateral investment treaty. The claimant is West Cumbria Mining, challenging UK High Court’s ruling last year that overturned the previous government’s approval for a new coal mine in Cumbria. that overturned the previous government’s approval for a new coal mine in Cumbria.
ISDS mechanisms allow foreign investors to bypass domestic courts and challenge government actions before private arbitration panels. Originally intended to shield foreign investors from arbitrary state interventions, ISDS has evolved into a powerful instrument for corporations to seek compensation from governments over regulations in the public interest.
Fossil fuel investors have been the most frequent users of the system. With some awards reaching billions, ISDS can have a chilling effect on government policymaking, discouraging governments from introducing ambitious climate measures. The Cumbria case demonstrates how ISDS exposes climate policies — even those upheld by domestic courts — to corporate attack.
While the UK has long used the ISDS system to defend its investors abroad, it has rarely faced claims itself. The Cumbria case signals that assumption is no longer safe.
To safeguard its climate commitments and preserve regulatory autonomy, the UK must exclude ISDS from future treaties and take steps to substantially reform or terminate existing agreements — more than 100 in force. The UK government’s decision last year to withdraw from the Energy Charter Treaty, the most litigated investment agreement worldwide, showed some recognition of this threat. Yet, unless it also addresses its broader network of treaties, the UK will remain vulnerable to costly corporate challenges that undermine its climate agenda.
See Eunjung’s argument in full published by Sustainable Views – Anti-climate legal instrument could cost the UK billions – Sustainable Views
