UK signals it may limit compensation to British Steel owner amid treaty dispute

The UK government has signalled it could limit or refuse compensation sought by Jingye Group after taking control of British Steel. The dispute centres on the nationalisation of the steelworks and the costs that may follow. Jingye has now begun consultation under a bilateral investment treaty with the UK government.

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The company said it was seeking compensation after the state intervention, while the Department for Business and Trade said any payout would be decided independently and only paid if it is found to be due. A department spokesperson said the government would comply with its international obligations. Jingye has also said it hopes the UK will safeguard the rights and interests of Chinese companies and other global investors.

British Steel employs about 2,700 staff and Jingye bought the business in 2020. The company had previously said the Scunthorpe plant was losing £700,000 a day, according to the supplied material. The government took control of the business on 12 April 2025 to prevent the last two remaining blast furnaces from closing, and legislation to support nationalisation is now moving through Parliament.

The case matters because it combines industrial policy, investor protection and the future of one of the UK's main steelmaking assets. The Steel Industry Bill is intended to secure steelmaking capability and allow the government to explore options to modernise the industry. It also raises the prospect of a treaty-based dispute over how much compensation, if any, should be paid to a foreign owner after state intervention.

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The bilateral investment treaty process is designed to protect investors' money in both countries, and it can become relevant when governments take steps that affect foreign-owned assets. In this case, Jingye's consultation under the treaty suggests the company is preparing to challenge the financial consequences of nationalisation. The government, meanwhile, has said it will appoint an independent valuer where the powers in the bill are used.

What remains unclear is the size of any compensation claim and whether the two sides can reach agreement without a formal dispute. The next stage will depend on the progress of the Steel Industry Bill in the House of Lords and on any further response from Jingye. It is also not yet clear how the valuation process will be handled if the government decides compensation is payable at all.

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