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

Can you perceive our system of government operates? It could be along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills become law. Statutes is upheld by the courts. End of story. Well, that was how it once functioned. Those days are over.

The Emergence of Secret Arbitration Panels

Today, foreign corporations, or the oligarchs who own them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals made up of commercial attorneys. These proceedings are conducted in secret. Unlike our courts, these panels provide no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, and neither can our government, including businesses based in this country. Access is granted only to entities registered abroad.

When a secret court rules that a government measure might diminish the corporation’s expected profits, it has the power to grant damages of vast sums, even billions.

These sums constitute not tangible damages but money the tribunal officials determine the company could potentially have made. The administration may have to rescind the measure. It will be hesitant to enacting future policies of a similar nature, due to the risk of facing litigation.

A Mechanism Growing Exponentially

Historically high figures of legal actions are being brought, as firms take cues from each other, and investment funds fund legal actions for a share of a cut of the takings. The outcome? National sovereignty and democracy are now prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the decisions made by parliaments is that this provision has been incorporated – without democratic mandate, and typically amid an atmosphere of profound opacity – inside trade treaties.

A Specific Instance: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the high court. The judge ruled that proposals to open the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine would have had no impact on national carbon targets. The incoming administration subsequently revoked the permission the previous administration had issued. Currently, this legal outcome is under threat by an secret arbitration panel answering to exclusively the companies petitioning it.

In August, a corporate entity whose final controllers are located in the Cayman Islands filed a lawsuit versus the UK government. Recently a dispute settlement body in the US capital was convened to consider the case.

The company is suing the UK for the revenue it could have earned if the mine had received permission to proceed. We have no idea how much this could amount to. Which individual is acting on its behalf challenging the state? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the national judiciary supports it, then a overseas corporation disputes it through an undemocratic private court, and a sitting MP acts on its behalf.

The Russian Challenge

On the same day that the panel on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case at present, but it appears probable that he’ll use the tribunal to challenge the sanctions the UK levied against him subsequent to the war in Ukraine. He has already initiated proceedings against another European state on these grounds, demanding sixteen billion dollars: an amount representing half nation's annual revenue. Included in the counsel on his side? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists argue that the EU’s delay in utilising seized Russian assets as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, secretive influence over sovereign states could be blocking the money Ukraine urgently requires.

Misleading Claims and Mounting Threats

Politicians promised that these events wouldn’t happen. Years ago, a government leader, advocating for the biggest and most dangerous of all such treaties, told us: “The UK has signed trade deal after trade deal and we have never seen a case in the past.” A consultant on this matter described critics of “alarmism … in reality, ISDS barely touches the UK much”. The general impression seemed to be that exclusively weaker states needed to fear these lawsuits. Predictions that “as corporations start to realise the authority they now possess, they will shift their focus from the weak nations to the developed economies” were dismissed with general mockery.

That warning has come to pass. In the current period, oil and gas and mining firms have initiated a unprecedented number of cases against nations rich and poor, opposing – as in the case of the Whitehaven project – government attempts to prevent climate breakdown. Firms have to date won vast sums via ISDS, of which energy giants have obtained eighty-four billion dollars. That represents the combined GDP