Foreign investment

What is the prevailing attitude towards foreign investment?

The United Kingdom has had an open-door policy regarding inward foreign direct investment (FDI) for more than 40 years. According to the World Investment Report of the United Nations Conference on Trade and Development (UNCTAD) 2017, the United Kingdom is the 23rd largest recipient of FDI. The United Kingdom’s inward FDI stock passed the £1 trillion level in 2014 (UKTI Inward Investment Report 2014 to 2015). FDI stock is a stable measure of FDI and demonstrates the long-term interest of foreign investors, and their confidence and commitment to the UK economy.

Successive UK governments have sought to emphasise the business-friendly aspect of UK policy. In 2018, the World Bank declared the United Kingdom to be the seventh best place in the world for ease of doing business. One of the United Kingdom’s strong points as an FDI destination is the relative lack of red tape and speed of formalities. For instance, only 17 days are required to establish a company in the United Kingdom, compared with the European average of 32 days, which places the United Kingdom in first place in Europe and sixth in the world. Foreign companies establishing British subsidiaries generally encounter no special nationality requirements for directors or shareholders, although at least one director of any company registered in the United Kingdom must be ordinarily resident in the United Kingdom.

The United Kingdom has one of the lowest corporation tax rates in the G20, a relatively low minimum wage and the second largest labour force in Europe. The UK government has a strong track record of defending UK-registered companies’ rights within the EU, irrespective of foreign ownership considerations.

What are the main sectors for foreign investment in the state?

The United Kingdom’s inward FDI stock is spread across a range of industry sectors. The largest concentration is in financial services (45 per cent), followed by mining (9 per cent), information and communication technologies (8 per cent), and oil, pharmaceuticals and chemicals (6 per cent). According to the Inward Investment Report 2014 to 2015, financial, professional and business services received the largest number of inward FDI projects and associated jobs - 515 projects, representing a 34 per cent increase, while the advanced manufacturing sector recorded a 12 per cent increase in the number of new investments.

Is there a net inflow or outflow of foreign direct investment?

According to information published by the Office of National Statistics in 2015, representing data collected from 2013 to 2014, new flows of FDI abroad (outward investment) decreased from £28.4 billion in 2013 to a negative flow of £79.9 billion in 2014, reflecting disinvestment. The UK international investment position abroad (outward investment) stood at £1,015.4 billion in 2014. As regards FDI into the United Kingdom (inward investment), new flows were £44 billion in 2014, taking the international investment position of foreign companies in the United Kingdom to £1,034.3 billion. As such, there remains aggregate net outflow of FDI in the United Kingdom, although the gap is steadily shrinking.

Investment agreement legislation

Describe domestic legislation governing investment agreements with the state or state-owned entities.

There are no requirements over the form of contracts entered into by foreign investors in the United Kingdom - whether they be with the government or with private parties.

International legal obligations

Investment treaties

Identify and give brief details of the bilateral or multilateral investment treaties to which the state is a party, also indicating whether they are in force.

To date, the United Kingdom has entered into 106 bilateral investment treaties (BITs), of which 94 are currently in force. This makes the United Kingdom the country with the fourth most BITs in the world.

The United Kingdom is a signatory to the Energy Charter Treaty (ECT): an international agreement that establishes a multilateral framework for cross-border cooperation in the energy industry. The ECT covers all aspects of commercial energy activities including trade, transit, investments and energy efficiency. The treaty is legally binding and contains investor-state dispute resolution procedures. The ECT has been in force in the United Kingdom since 16 April 1998.

If applicable, indicate whether the bilateral or multilateral investment treaties to which the state is a party extend to overseas territories.

UK BITs typically include a territorial application provision according to which the territory of the United Kingdom comprises its metropolitan territories (Great Britain and Northern Ireland) and any territory to which the BIT is extended in accordance with an Exchange of Notes between the Contracting Parties. Through this mechanism, the United Kingdom extends the application of its BITs to the Crown dependencies (Jersey, Guernsey and the Isle of Man) and its overseas territories (such as Bermuda and the British Virgin Islands). Such territorial extension provisions are important because the Crown dependencies and UK overseas territories have separate commercial registries. Therefore, an extension of a UK BIT to a Crown dependency of a UK overseas territory has the effect that legal entities incorporated in such territories also become covered investors under the BIT in question. Currently, 30 BITs extend to the Crown dependencies (Guernsey, Jersey and the Isle of Man). Some of these BITs also extend to Bermuda, the Cayman Islands, Gibraltar, and the Turks and Caicos Islands.

The United Kingdom has also extended the application of the ECT to Jersey, Guernsey and the Isle of Man, while it is disputed whether the ECT ceased to apply to Gibraltar on 16 April 1998, the point at which it entered into force for the United Kingdom.

Has the state amended or entered into additional protocols affecting bilateral or multilateral investment treaties to which it is a party?

The UK’s BIT practice indicates that any amendments are typically made through an Exchange of Notes or a Protocol typically agreed to shortly after the signature of the BIT. See, for example, Protocol to the UK-South Africa BIT (1994).

Most of the UK’s Exchanges concern the territorial application of UK BITs, or other issues of minor importance, such as Exchanges made to take account of territorial succession issues. See, for example, Exchange of Notes to the UK-Federal Republic of Yugoslavia BIT for the amendment of the title and text of the BIT from ‘Federal Republic of Yugoslavia’ to ‘Serbia’.

The United Kingdom has also replaced three BITs: the UK-Colombia BIT (1994) in 2010; the UK-Romania BIT (1976) in 1995; and the UK-Sierra Leone BIT (1981) in 2000.

Has the state unilaterally terminated any bilateral or multilateral investment treaty to which it is a party?

No. However, South Africa terminated its BIT with the United Kingdom on 30 August 2014. Under the relevant sunset clause, that BIT continues in effect for a period of 20 years subsequent to that date in respect of investments made while the BIT was in force.

Has the state entered into multiple bilateral or multilateral investment treaties with overlapping membership?

No. However, the ECT and certain BITs apply in parallel.

ICSID Convention

Is the state party to the ICSID Convention?

The United Kingdom signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) 1965 on 26 May 1965, and deposited its instrument of ratification on 19 December 1966. The ICSID Convention entered into force with respect to the United Kingdom on 18 January 1967. The United Kingdom has also extended the application of the ICSID Convention to the Crown dependencies and the overseas territories: Guernsey (10 December 1968); Jersey (1 July 1979); the Isle of Man (1 November 1983); and Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Falkland Islands, Gibraltar, Montserrat, South Georgia and South Sandwich Islands, St Helena, and Turks and Caicos Islands (19 December 1966).

Mauritius Convention

Is the state a party to the UN Convention on Transparency in Treaty-based Investor-State Arbitration (Mauritius Convention)?

The United Kingdom signed the Mauritius Convention on 17 March 2015, but it has not ratified it yet.

Investment treaty programme

Does the state have an investment treaty programme?

The United Kingdom launched its BIT programme in the early 1970s. The United Kingdom BIT programme owes its inspiration to earlier national treaty programmes of European nations such as Germany and Switzerland, as well as the Organisation of Economic Co-operation and Development Draft Convention 1962 (OECD) on the Protection of Foreign Property.

The first BIT concluded by the United Kingdom was with Egypt in June 1975. A small number of BITs with other developing countries were concluded in the latter half of the 1970s. Thereafter, a gradual expansion in the number of BITs has taken place. There was rapid growth in the number of UK BITs in the mid-1990s, partly inspired by the break-up of the former Soviet Union and the opportunities presented by the new markets in central and eastern Europe.

The UK BIT programme supports several key economic policy objectives, from protection of investment interests overseas to promotion of market-oriented policies and exports. The UK BIT programme’s basic aims are to:

  • protect investment abroad in those countries where investors’ rights are not already protected through existing agreements (such as treaties of friendship, commerce and navigation, or free trade agreements);
  • encourage the adoption of market-oriented domestic policies that treat private investment in an open, transparent and non-discriminatory way; and
  • support the development of international law standards consistent with these objectives.

Regulation of inbound foreign investment

Government investment promotion programmes

Does the state have a foreign investment promotion programme?

The national agency for the promotion of inward FDI in the United Kingdom is UK Trade and Investment (UKTI). UKTI aims to help the economy grow by boosting exports and encouraging overseas investors to come to the United Kingdom. This involves providing a bespoke service for foreign direct investors, including market analysis, predictive targeting and tailored business propositions. UKTI advises companies in the search for business locations, and provides assistance regarding local sector expertise, clusters and hubs, supply chains, the availability of skills, property and transport links.

UKTI also runs programmes that are designed to attract foreign businesses and entrepreneurs to the United Kingdom. For example, since the formation of the Global Entrepreneur Programme 10 years ago, more than £1 billion of venture capital has been raised by entrepreneurs seeking to take advantage of the UK’s business environment.

Applicable domestic laws

Identify the domestic laws that apply to foreign investors and foreign investment, including any requirements of admission or registration of investments.

Foreign investment into the United Kingdom is, for the most part, unregulated. English law treats foreign-owned businesses identically to UK-owned businesses. There are no economic sectors restricted to UK nationals or requiring specific holdings based on nationality. There are no restrictions of foreign ownership of real estate and there are no exchange control or currency regulations affecting foreign investment. Foreign companies establishing British subsidiaries generally encounter no special nationality requirements on directors or shareholders, although at least one director of any company registered in the United Kingdom must be ordinarily resident in the United Kingdom.

There are relatively few obstacles to incorporating and registering a business in the United Kingdom. The process of forming a business can be completed in 17 days upon completion of the following steps:

  • check the proposed company name for uniqueness at the company names index database;
  • prepare memorandum and articles of association and complete form IN01 (the application for registration of a business);
  • file incorporation documents with Companies House;
  • contact HMRC and register for VAT;
  • contact HMRC and register for PAYE; and
  • sign up for employer’s liability insurance.

Specific authorisation is, however, required for FDI in certain sensitive or regulated economic sectors. For example:

  • banking and insurance concerns must obtain Financial Conduct Authority and government authorisation before commencing operations in the United Kingdom;
  • companies providing telecommunications, internet and broadcasting networks and services are regulated by the Office of Communications;
  • companies involved in the generation, supply, transmission or distribution of electricity, or the supply, shipping, distribution or transmission of gas onshore in Great Britain, or the operation of an interconnector, require a licence from the Office of Gas and Electricity Markets; and
  • companies that act as a water or water and sewerage undertaker are subject to regulation by the Water Services Regulation Authority.

Further, foreign (and British) investors should be aware that they must comply with monopoly and merger rules, including those prescribed by EU law. Depending on the size of the transaction, either the EU Merger Regulation or Part 3 of the Enterprise Act 2002 will apply, with mergers requiring approval from either the European Commission or the UK Competition Commission. Investors are also subject to an ongoing obligation to comply with EU public procurement legislation. Once the withdrawal of the United Kingdom from the European Union is implemented, this framework is expected to change.

Relevant regulatory agency

Identify the state agency that regulates and promotes inbound foreign investment.

UKTI is the agency responsible for attracting FDI to the United Kingdom. It reports to the Foreign Office and the Department for Business, Innovation and Skills. As previously discussed, foreign investment is not regulated per se and there is no state agency that is specifically tasked with regulating inbound foreign investment. However, foreign investors in certain sectors are regulated in the same manner as UK nationals conducting business in those areas.

Relevant dispute agency

Identify the state agency that must be served with process in a dispute with a foreign investor.

Process must be served on the Treasury Solicitor’s Department, which is the in-house legal organisation of the UK’s Government Legal Service (

Investment treaty practice

Model BIT

Does the state have a model BIT?

The UK government completed an update of the UK Model BIT in 2008. The UK Model BIT is available online at:

Preparatory materials

Does the state have a central repository of treaty preparatory materials? Are such materials publicly available?

The United Kingdom has a central repository of treaty preparatory materials at the National Archives in Kew, London. The National Archives holds records of the UK’s overseas relations dating back to the late 12th century, including diplomatic reports, memoranda and correspondence, cabinet papers and parliamentary ratification records. The documents may be accessed on-site in physical form, or copies may be purchased online or by telephone.

More than 14,000 treaties applying to the United Kingdom are available electronically through the UK Treaties Online (UKTO) service at: The UKTO database enables users to research the existence of treaties and obtain key information (such as place of signature and date of entry into force). The UK government supplies treaty information to the British and Irish Legal Information Institute, an online database accessible at:

The UK government also provides a treaty inquiry service that provides advice on treaties that involve the United Kingdom and its Crown dependencies and overseas territories. While treaty section staff are unable to provide an interpretation of a treaty, advice can generally be obtained on whether a treaty has entered into force, details of the signatories and contracting parties, together with dates of signature, ratification, approval, acceptance, accession, succession and withdrawal or denunciation. Reservations, declarations or objections and, where applicable, the depositary can usually be identified. Contact details for the treaty inquiry service are available at:

Scope and coverage

What is the typical scope of coverage of investment treaties?

UK BITs tend to cover a broad range of investments (including movable and immovable property, shares, debt instruments, intellectual property rights and business concessions), and offer their protection to any foreign national or firm (typically defined by incorporation under the laws in any part of the home state) operating in the territory of the other country. As a rule, UK BITs stipulate that investments will need to be made in accordance with the host state’s laws. Failure to abide by this requirement may result in the loss of the investor’s ability to claim under the applicable BIT. However, once a foreign investor has established a lawful investment in the host state’s territory, it will enjoy the rights and protections set out in the relevant BIT.


What substantive protections are typically available?

While UK BITs share a core set of protections, there are variations depending on the counterparty to each treaty, as well as on timing. Broadly speaking, UK BITs provide investors with:

  • compensation in the event of nationalisation, expropriation and equivalent measures;
  • guarantee certain minimum standards such as entitlement to fair and equitable treatment and full protection and security;
  • offer some protection against losses in the event of conflict or war;
  • affirm the right to repatriate profits and other returns; and
  • guarantee treatment in line with that accorded by the host state to investors of its most-favoured nation or to the host state’s own nationals.
Dispute resolution

What are the most commonly used dispute resolution options for investment disputes between foreign investors and your state?

No publicly available investment treaty award has been rendered against the United Kingdom. The only publicised claim by a foreign investor against the United Kingdom pursuant to an investment treaty is Ashok Sanchetti v United Kingdom, brought under the UK-India BIT and the United Nations Commission on International Trade Law 1976 (UNCITRAL) arbitration rules.

Nevertheless, at least 30 claims have been commenced by UK investors against foreign governments under UK BITs ( In terms of the most frequently occurring dispute resolution options, most UK BITs provide for ICSID arbitration, while approximately 50 UK BITs provide for UNCITRAL arbitration, often in addition to, or as an alternative to, ICSID arbitration.


Does the state have an established practice of requiring confidentiality in investment arbitration?

The lack of public information on investment arbitrations involving the United Kingdom does not allow firm conclusions to be drawn regarding the United Kingdom’s policy on confidentiality, although there are indications that the United Kingdom favours confidentiality.

In the only publicised investment treaty arbitration brought against the United Kingdom, the government formally declined to release the notice of arbitration since it would probably ‘prejudice relations between the United Kingdom and an international organisation; UNCITRAL’, asserting that ‘the public interest in withholding the material outweighs the public interest in disclosure’ (see:


Does the state have an investment insurance agency or programme?

The United Kingdom does not have a state insurance agency or programme. The United Kingdom is a member of the Multilateral Investment Guarantee Agency.

Investment arbitration history

Number of arbitrations

How many known investment treaty arbitrations has the state been involved in?

Apart from the UNCITRAL case Ashok Sanchetti v United Kingdom, there is no publicly available information on investment treaty arbitrations that have been commenced against the United Kingdom. This case only became public when the UK courts described the arbitration in a judgment in domestic proceedings concerning an application for a stay of domestic proceedings (which was refused).

Industries and sectors

Do the investment arbitrations involving the state usually concern specific industries or investment sectors?

We do not possess sufficient information to address this question.

Selecting arbitrator

Does the state have a history of using default mechanisms for appointment of arbitral tribunals or does the state have a history of appointing specific arbitrators?

We do not possess sufficient information to address this question.


Does the state typically defend itself against investment claims? Give details of the state’s internal counsel for investment disputes.

The United Kingdom’s internal counsel for international arbitration disputes is the Foreign and Commonwealth Office.

Enforcement of awards against the state

Enforcement agreements

Is the state party to any international agreements regarding enforcement, such as the 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

The United Kingdom is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention) and the ICSID Convention.

The United Kingdom has attached the ‘Reciprocity Reservation’ to its ratification of the New York Convention, such that the United Kingdom will apply the New York Convention only to recognition and enforcement of awards made in the territory of another contracting state. Moreover, the United Kingdom has extended the application of the New York Convention to the Crown dependencies (Guernsey, Jersey and the Isle of Man) and to the British overseas territories of Bermuda, the Cayman Islands and Gibraltar.

Award compliance

Does the state usually comply voluntarily with investment treaty awards rendered against it?

No information is publicly available regarding investment treaty awards rendered against the United Kingdom.

Unfavourable awards

If not, does the state appeal to its domestic courts or the courts where the arbitration was seated against unfavourable awards?

No information is publicly available regarding investment treaty awards rendered against the United Kingdom.

Provisions hindering enforcement

Give details of any domestic legal provisions that may hinder the enforcement of awards against the state within its territory.

The enforcement of non-ICSID arbitral awards in the United Kingdom is governed by the New York Convention and the UK Arbitration Act 1996 (AA 1996), which gives effect to and implements the New York Convention (see AA 1996: AA 1996 makes provision for the mutual recognition and enforcement of arbitral awards made in the territory of a party to the New York Convention (section 101 of AA 1996). Such awards may be enforced by leave of the court (section 101(2) of the AA 1996). Recognition of ‘New York awards’ may, however, be refused for the following reasons (section 101(3) of AA 1996):

  • that a party to the arbitration agreement was (under the law applicable to it) under some incapacity;
  • that the arbitration agreement was not valid under the law to which the parties subjected it or, failing any indication thereon, under the law of the country where the award was made;
  • that a party was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings, or was otherwise unable to present its case;
  • that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions beyond the scope of the submission to arbitration; and
  • that the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, with the law of the country in which the arbitration took place.

In addition, recognition or enforcement of a ‘New York award’ may be refused if ‘the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to recognise or enforce the award’ (section 103(3) of AA 1996).

Separate provisions apply to the recognition and enforcement of ICSID awards. Enforcement of ICSID awards cannot be challenged in the courts of the United Kingdom except on grounds of sovereign immunity under article 55 of the ICSID Convention. Pursuant to article 52(1) of the ICSID Convention, the United Kingdom may apply to have an ICSID award annulled on grounds of domestic or international public policy.

Pursuant to the UK Arbitration (International Investment Disputes) Act 1966 (AIIDA 1966), ICSID awards must be registered under rules and procedures prescribed by the UK courts. The effect of registration is to give the same force to an ICSID award as a judgment of the high court of England and Wales (section 2 of AIIDA 1966). However, the execution of an award may be stayed if an application to stay the enforcement of the award has been made under the ICSID Convention (section 2(1) of AIIDA 1966) (

The authors would like to thank Phil Devenish, Jagdish Menezes and Odysseas Repousis for their assistance in preparing this chapter. The information contained in this chapter was accurate as at October 2018.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics in your jurisdiction?

No updates at this time.