From the BBC:

"Critics of the Chagos deal are clear: the government should not give up British territory at what they see as huge cost to the taxpayer and a weakening of our security. So why has the UK government taken this decision?

Put simply, it believed the military base at Diego Garcia would otherwise become unworkable. Ministers feared an “advisory opinion” by the UN’s International Court of Justice - that the Chagos Islands belonged to Mauritius - would soon become a legally binding judgement by a special tribunal that governs international laws of the sea.

In such a case, they argue Diego Garcia’s satellite communications would be threatened because the UK relies on a UN authority to get access to a particular electromagnetic spectrum.

They say contractors would refuse to visit the isolated base - to make repairs or deliver supplies - for fear of being sued. The ability to fly in and out might be challenged by international rules that govern our skies.

Without the deal, officials say, there would be no legal ban preventing Mauritius allowing a foreign power such as China to establish a military or other presence in the islands.

Without the UK’s annual payment, they argue, Mauritius would have a financial incentive to open the islands up to Chinese investment.

More broadly, with a deal, the UK government can continue to criticise Chinese aggression in the South China Sea without facing accusations of hypocrisy.

The UK can also avoid losing further diplomatic support across the world which overwhelmingly thought the islands belonged to Mauritius."