Hello, Foreign Tycoons and Corporations! Please Proceed and Take Legal Action Against the UK for Billions.

What is your reckon our political system works? Perhaps similar to this. We elect MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. Statutes are enforced by the courts. End of story. Well, that used to be how it operated in the past. No longer.

The Advent of Offshore Arbitration Panels

Today, international firms, along with the wealthy individuals behind them, are able to litigate against governments for the policies they pass, at private courts made up of business advocates. The cases are held in secret. In contrast to domestic courts, these tribunals allow no avenue for appeal or oversight by judges. You or I are unable to file a case to them, just as our government, or even companies operating from this country. The door is open exclusively to corporations operating from foreign soil.

If a tribunal finds that a law or policy might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions, running into billions.

These sums are based not on tangible damages but money the panel members conclude the company would perhaps have made. The government might be compelled to drop the legislation. It will be deterred from introducing similar legislation along the same lines, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of disputes are being brought, as companies observe each other, and investment funds bankroll lawsuits for a share of a cut of the awards. The result? National sovereignty and democracy are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override national legislation and the decisions enacted by legislatures is that this provision has been written – without democratic mandate, and typically amid conditions of total confidentiality – within bilateral investment treaties.

A Concrete Example: The Cumbrian Coalmine

A year ago, environmental campaigners secured a significant win at the high court. The presiding officer ruled that plans to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the questionable argument that the mine could have no impact on climate commitments. The incoming administration subsequently revoked the consent the former government had granted. Today, this victory is under threat by an secret arbitration panel reporting to no one but the corporations bringing the case.

In August, a company whose final controllers are based in the Cayman Islands lodged a claim versus the UK government. Last week a dispute settlement body in Washington DC was established to hear it.

The claimant is litigating against the UK for the revenue it might have made if the mine had received permission to proceed. Citizens have no clear indication how much this might be. Which individual is representing it against the state? An elected representative, and previous senior legal advisor in the previous government, the self-proclaimed patriot Geoffrey Cox. The government passes a law, the national judiciary upholds it, then a international entity contests it through an undemocratic private court, and a sitting MP represents its behalf.

A Sanctions Lawsuit

Concurrently that the court on the coal mine dispute was convened, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. The public knows scarce of the case so far, but it seems likely that he will utilise the arbitration process to fight the restrictions the UK enacted against him following the war in Ukraine. He has previously initiated proceedings against a small nation with similar intent, demanding sixteen billion dollars: half that nation's yearly income. Part of the counsel acting for him in that case? Cherie Blair, spouse of the previous PM.

Legal experts contend that the EU’s procrastination in using frozen Russian assets as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over elected governments may be obstructing the funds Ukraine desperately needs.

Misleading Claims and Escalating Costs

We were assured that such things wouldn’t happen. Previously, a government leader, advocating for the most significant and hazardous of all these agreements, stated: “Britain has agreed to trade agreement after trade deal and there has never been a case in the past.” A consultant on this topic described campaigners of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by such legal actions. Predictions that “when companies grasp the influence bestowed upon them, they will turn their attention from the vulnerable countries to the wealthy nations” were dismissed with widespread derision.

That warning has now materialised. This year, fossil fuel and mining firms have lodged a historic level of cases against nations rich and poor, challenging – as in the case of the Whitehaven project – government attempts to halt environmental catastrophe. Companies have so far won vast sums via ISDS, of which fossil fuel companies have obtained $84bn. That represents the combined GDP