The Nepal–Britain Treaty was first discussed in 1921 and the final treaty was signed on 21 December 1923 in Singha Durbar. The treaty was the first formal acknowledgement by the British that Nepal, as an independent nation, had the right to conduct its foreign policy in any way it saw fit and was considered to be “a great achievement of 25 years of Chandra Shumsher’s diplomacy.” The treaty was recorded in 1925 in the League of Nations.
Background
Expansion of Gorkha Kingdom (Nepal) While the territory of Nepal has been united and fragmented multiple times during the reign of various rulers throughout history, the Expansion of Kingdom, campaign of present-day Nepal was initiated by Prithivi Narayan Shah, who succeeded to the throne of Gorkha after the death of his father Nara Bhupal Shah in 1743 (1799 BS). Nepal, at the time, was divided into more than 50 small principalities. Prithivi Narayan Shah and his successors expanded the territory of the small state of Gorkha into a large kingdom. At its peak, during the time of Prime Minister Bhimsen Thapa, in 1810, the territory of Nepal extended from Sutlej River in the west to Tista River in the east. However, the country of Nepal and its existence was still a mystery in many of the European countries.
Sugauli Treaty
The Sugauli Treaty of 1816 had rendered moot the degree of independence of Nepal. The sixth, seventh and eighth points of the treaty were: 6) The king of Nepal engages never to molest or disturb the king of Sikkim in the possession of his territories. If any difference shall arise between Nepal and Sikkim, it shall be referred to the arbitration of the East India Company.
7) The king of Nepal hereby engages never to take or retain in his service any British subject, nor the subject of any European or American State, without the consent of the British Government.
8) In order to secure and improve the relations of amity and peace hereby established between Nepal and Britain (East India Company), it is agreed that accredited Ministers from each shall reside at the court of the other.
The sixth point of the treaty directly questions the degree of independence of Nepal. The fact that any differences between Nepal and Sikkim will be "referred to the arbitration of the East India Company" sees Nepal as a semi-independent or a vassal state or tributary of the British empire. The seventh point also limits the Foreign policy of Nepal. The eighth point also is due attention as the term "Resident Minister" is used, and not "ambassador".
Nepalese-British relations before the treaty of 1923
After the Anglo-Nepalese War of 1814–1816, Nepal had generally maintained a peaceful stance with the East India Company. The friendship between the two countries reached its pinnacle during the reign of Jang Bahadur Rana. During the Sepoy Mutiny of 1857, Nepal also involved itself in support of the East India Company. After the Sepoy Mutiny, some areas of the Terai region that comprise today's Banke, Bardiya District, Kailali, and Kanchanpur districts of Western Terai, collectively known as "Naya Mulok" ("New Country") were returned to Nepal. Nepal also helped the British in the First World War. The relationship between Nepal and Britain was generally good both before and after the treaty.
Treaty discussions
The then Prime Minister of Nepal, Chandra Shamsher wanted to conclude a treaty with Britain for the recognition of the independence of Nepal. Aware of the implied restrictions placed upon the foreign policy of Nepal by the Sugauli Treaty, he wanted Nepal to be recognized as a fully sovereign state. In 1921, when the Prince of Wales, later Edward VIII, came to Kathmandu, Chandra Shumsher raised the question of formulating a new peace treaty between Nepal and Britain. The treaty was discussed by the British authorities in Kathmandu, Nepal and London for more than a year before the final treaty was signed, 21 December 1923, in Singha Durbar, Kathmandu.
Terms of the Treaty
The terms of the 1923 Nepal Britain Treaty were: 1) Nepal and Britain will forever maintain peace and mutual friendship and respect each other's internal and external independence.
2) All previous treaties, agreements and engagements, since and including the Sugauli Treaty of 1815, which have been concluded between the two Government are hereby cancelled, except so far as they may be altered by the present Treaty.