The Ruthia Family’s Claim Against Britain – Indian Blog of International Law

Gurman Narula

In 1917, as the First World War raged across Europe, a businessman named Seth Jumma Lal Ruthia sat in Sehore and made a decision that seemed entirely sensible at the time. He subscribed Rs. 35,000 to the Indian War Loan, a coordinated imperial borrowing programme through which the colonial administration raised money to fund Britain’s war effort. War bonds were being sold across the empire with considerable patriotic fanfare. The ruling Nawab of Bhopal contributed enormous sums. Wealthy subjects followed suit. Seth received his certificate, dated 4 June 1917, and recorded his contribution to the Government and Empire.

More than a hundred years later, Seth’s descendants found that certificate. His descendants now seek repayment plus compound interest alleged to run into several crores from the present‑day United Kingdom, raising the question whether such a colonial‑era financial obligation can still be enforced against a successor state more than a century later. To answer that question, one must examine the nature of war bonds, rules of state succession, doctrines of sovereign immunity and limitation, conflict‑of‑laws issues, and, finally, whether any of this can be reframed as an arbitrable sovereign‑debt dispute.

What the Certificate Actually Represents

Before examining the legal barriers, it is worth being clear about what Seth actually bought. The 1917 certificate is not a private loan to an individual official or to the Bhopal State. It is evidence of a pooled sovereign debt instrument, a small slice of a large government borrowing programme through which the imperial administration promised to repay principal and interest on defined terms.

This matters because it means the obligation was always tied to a specific government entity, namely British India and the imperial administration, both of which have long since ceased to exist. The moment that entity dissolved, questions arose about who, if anyone, stepped into its shoes. And those questions do not have comfortable answers for the Ruthia heirs.

The Succession Problem: Who Inherited the Debt?

When British India was dismantled in 1947, its territory, assets and liabilities were divided between the new states of India and Pakistan. Bhopal, as a princely state, eventually acceded to India and was absorbed into the Indian Union. In international law, the rules governing what happens to a predecessor state’s debts fall under the doctrine of state succession, and as Malcolm N. Shaw’s authoritative text on International Law makes clear, succession to debts is governed primarily by specific agreement or explicit allocation among successor states rather than by any automatic transfer of liability.

The independence era instruments and negotiations of 1947 and 1948 focused overwhelmingly on formal public debts between governments, external bonds issued in London and obligations owed to other states or international institutions. There is simply no indication that small wartime bond subscriptions by individual Indian subjects were ever the subject of explicit discussion, let alone formal allocation.

This produces three possible conclusions, none of them useful to the Ruthia family. Either the debt was purely that of British India, nominally divided between India and Pakistan but never specifically assigned to private creditors like Seth; or it was connected to the Bhopal State and absorbed by India after accession, with no mechanism for private enforcement surviving today; or it was an imperial level obligation that simply lapsed because no successor state expressly agreed to carry it forward. Without a treaty, statute or declaration specifically assigning this kind of war loan liability to the United Kingdom, the reasonable legal conclusion is that there is no surviving enforceable obligation against the UK at all. As Shaw’s analysis of cases like the Tinoco Claims Arbitration confirms, successor states are not bound by obligations they have not expressly assumed.

Sovereign Immunity: The Jurisdictional Wall

Suppose, for the sake of argument, that one were to set aside all succession doubts and assume the UK had inherited the liability. The next obstacle is sovereign immunity, and it is a formidable one.

Under the State Immunity Act 1978, the United Kingdom gives effect to what lawyers call the “restrictive” theory of immunity. Foreign states are generally protected from the jurisdiction of UK courts, but exceptions exist for commercial transactions. Section 3 of the Act removes immunity in proceedings relating to a commercial transaction, and this is precisely why many modern sovereign bond disputes can be litigated in London courts today. States issue bonds on commercial terms, agree to English law and English jurisdiction, and the courts treat the bond issuance as a commercial activity rather than a sovereign act.

The 1917 war loan is a fundamentally different creature. There is no express waiver of immunity in Seth’s certificate. More importantly, the UK could credibly argue that borrowing money to finance a world war, sustain military operations and maintain imperial administration is the very definition of a sovereign act, what lawyers call an act jure imperii. Shaw’s analysis confirms that acts intimately connected with core governmental functions retain immunity under the restrictive regime, a principle illustrated by English cases including Trendtex Trading Corp v Central Bank of Nigeria. It is therefore very unlikely that any court would insist on hearing the merits of a century-old war finance claim over the objection of the UK government.

Which Court? The Forum Strategy Problem

If the heirs pursued litigation despite all of this, they would also face painful questions under private international law about where to sue and which country’s law would apply.

A London action might seem attractive given the UK’s historical role and its well-developed sovereign debt litigation infrastructure. But an English court would still apply the State Immunity Act framework and English limitation statutes, both pointing toward early dismissal. Even reaching the merits would require surviving a jurisdictional challenge from the UK government, which would be a very unlikely outcome given the age and political sensitivity of the claim.

An Indian court would face its own difficulties. It would need to decide whether it could exercise jurisdiction over a foreign state in a civil suit brought by private individuals, determine which law applies (the law of British India in 1917? modern Indian law? English law by analogy?), and consider whether independent India ever expressly accepted responsibility for this type of colonial era debt. There is no clear evidence that it did. The case also lacks all the standard devices that help modern cross-border disputes find a home: no jurisdiction clause, no choice of law clause, and no connection to contemporary trade or investment instruments that could provide an additional jurisdictional hook.

Can It Go to Arbitration?

The final avenue to consider is arbitration. In recent years, sovereign debt disputes have occasionally been resolved through international arbitral tribunals rather than domestic courts. The most notable example is Abaclat and Others v Argentina, where an ICSID tribunal held that Italian holders of Argentine sovereign bonds could, in principle, bring mass claims under the bilateral investment treaty between Italy and Argentina.

That decision, however, depended entirely on the specific wording of the treaty and Argentina’s prior consent to ICSID arbitration. It established no general rule that all sovereign bonds are arbitrable. And as scholarship on the jurisdiction of arbitral tribunals over sovereign debt disputes makes clear, arbitrability depends almost entirely on treaty drafting choices and cannot be assumed without express language.

In the Ruthia case, there is no arbitration clause in the 1917 certificate, no modern India-UK bilateral investment treaty drafted with the intention of retroactively covering First World War era colonial bonds, and no agreement by the UK to submit this dispute to any arbitral body. The subject matter, repayment of a debt, is in abstract terms arbitrable. But this particular dispute is practically non-arbitrable because the one essential ingredient, state consent, is entirely absent.

What Remains: History, Morality and Political Goodwill

Once formal legal routes are exhausted, only political or moral strategies remain. The family could ask the Indian government to raise the matter diplomatically with the United Kingdom or to support a broader conversation about colonial era financial contributions and historical redress. Comparative studies of sovereign debt disputes show that when courts are closed, creditors sometimes pursue media campaigns or negotiations seeking symbolic acknowledgment or ex gratia payments rather than formal judgments.

But any such outcome would be discretionary, rooted in political goodwill rather than legal obligation. From the perspective of hard law, the doctrines of state succession, sovereign immunity, limitation, private international law and arbitrability all converge on the same conclusion.

Seth Jumma Lal Ruthia’s certificate is a genuine piece of history and an evocative reminder of the financial sacrifices made by colonial subjects in a war that was not truly theirs. It deserves to be remembered and perhaps debated in the broader conversation about colonial reckoning. What it cannot do, under any realistic legal theory available today, is create an enforceable claim against the United Kingdom in any court or tribunal in the world.

The law, in this instance, has moved on. History has not.

(Gurman Narula is a fourth-year law student at National Law Institute University, Bhopal.)