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

Can you understand our system of government operates? Maybe similar to this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills are enacted as law. Statutes is upheld by the courts. End of story. Yet, that was how it once functioned. No longer.

The Rise of Offshore Tribunals

Nowadays, foreign corporations, or the billionaires who own them, can sue nation states for the laws they pass, at private courts made up of business advocates. The cases are held behind closed doors. Differing from national judiciaries, these panels grant no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, just as our government, or even businesses based in this country. Access is granted exclusively to corporations based overseas.

When a secret court rules that a government measure might diminish the corporation’s expected profits, it may order financial penalties of vast sums, running into billions.

These awards represent not real financial harm but funds the arbitrators determine the company could potentially have made. The administration could be forced to rescind the measure. It is deterred from enacting future policies of a similar nature, due to the risk of being sued.

A System Spiralling Out of Control

Unprecedented levels of legal actions are being initiated, as corporations take cues from each other, and private equity finance suits in return for a share of the takings. The consequence? Democratic sovereignty and democracy are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override a country's own laws and the rulings made by parliaments is that this provision has been incorporated – absent public approval, and frequently under conditions of total confidentiality – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coal Mine

A year ago, environmental campaigners won a great victory at the High Court. The presiding officer found that proposals to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had accepted the extraordinary assertion that the mine could have zero effect on our carbon budgets. The new government later cancelled the consent the former government had issued. Now, this legal outcome could be compromised by an secret arbitration panel reporting to no one but the companies filing the suit.

In August, a firm whose beneficial owners are located in the offshore financial centre filed a lawsuit against the UK government. Last week a dispute settlement body in Washington DC was established to adjudicate on it.

The company is suing the UK for the revenue it might have made if the mine had received permission to commence operations. The public has no idea how much this might be. Which individual is representing it challenging the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The state passes a law, the domestic court upholds it, then a foreign company challenges it through an undemocratic arbitration panel, and a elected official works for its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the coal mine dispute was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are nothing of the case at present, but it appears probable that he may employ the ISDS mechanism to contest the restrictions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against another European state on these grounds, seeking $16bn: an amount representing half nation's annual revenue. Part of the legal team acting for him in that case? Cherie Blair, wife of the former British prime minister.

Trade specialists believe that the EU’s procrastination in using frozen Russian assets as security for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This extraordinary, undemocratic power over elected governments could be blocking the funds Ukraine urgently requires.

Empty Promises and Growing Costs

Politicians promised that such things wouldn’t happen. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, stated: “Britain has agreed to investment treaty upon trade deal and we have never seen a case in the past.” A consultant on this topic labelled critics of “exaggeration … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that exclusively weaker states needed to fear these lawsuits. Predictions that “once firms grasp the power bestowed upon them, they will turn their attention from the poorer states to the strong ones” were dismissed with general mockery.

That warning is now a reality. This year, oil and gas and extraction companies have filed a record number of claims against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – state efforts to prevent climate breakdown. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP