Greetings, International Tycoons and Firms! Please Proceed and Litigate Against the UK for Billions of Pounds.

What is your reckon our political system operates? Maybe something like this. Citizens choose MPs. They debate and pass bills. When a majority is obtained, the bills become law. The law is upheld by the courts. That's it. Yet, that’s how it used to work. Those days are over.

The Emergence of Offshore Tribunals

Nowadays, overseas companies, along with the oligarchs that control them, can sue elected administrations for the laws they pass, at secret arbitration panels staffed by business advocates. Such disputes take place in secret. Unlike our courts, these bodies grant no opportunity to appeal or legal review. You or I are barred from bringing a case to them, nor can our government, or even businesses based in this country. They are open only to entities operating from foreign soil.

When a secret court finds that a government measure could harm the corporation’s expected profits, it has the power to grant compensation of vast sums, running into billions.

These sums constitute not tangible damages but money the arbitrators decide the company might otherwise have made. The administration could be forced to rescind the measure. It becomes hesitant to enacting future policies of a similar nature, worried about incurring a lawsuit.

A System Running Rampant

Record numbers of cases are being filed, as companies observe each other, and investment funds finance suits in exchange for a cut of the settlements. The consequence? Democratic sovereignty and popular rule are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the decisions taken by elected bodies is that this clause has been inserted – without public consent, and typically amid conditions of extreme secrecy – into international trade agreements.

A Real-World Case: The Cumbrian Coalmine

Last year, activists achieved a major legal triumph at the senior court. The presiding officer ruled that proposals to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have had no consequence on national carbon targets. The Labour government later cancelled the consent the previous administration had approved. Currently, this victory faces being overturned by an secret arbitration panel answering to no one but the entities filing the suit.

During August, a corporate entity whose final controllers are located in the tax haven filed a lawsuit versus the UK government. Recently a tribunal in Washington DC was convened to consider the case.

The claimant is suing the UK for the revenue it would have generated if the mine had received permission to commence operations. Citizens have no clear indication how much this might be. Which individual is acting on its behalf challenging the British government? A sitting MP, and ex-law officer in the previous government, the noted patriot the MP. The administration makes a decision, the domestic court upholds it, then a international entity disputes it through an secretive arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Case

Simultaneously that the panel on the coal mine dispute was established, information emerged from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. We know nothing of the case to date, but it seems likely that he’ll use the arbitration process to challenge the sanctions the UK levied against him after the invasion of Ukraine. He has initiated proceedings against another European state with similar intent, claiming sixteen billion dollars: equivalent to half of nation's annual revenue. Part of the counsel acting for him in that case? the wife of a former prime minister, married to the ex-UK leader.

Legal experts contend that the EU’s hesitation in leveraging immobilised state funds as guarantee for its financial support package arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, secretive influence over democratic administrations might be preventing the funds Ukraine critically depends on.

Empty Promises and Escalating Risks

Politicians promised that these scenarios could not occur. Previously, a former prime minister, promoting the most significant and hazardous of all investment pacts, stated: “The UK has signed investment treaty after trade deal and we have never seen a issue in the past.” A consultant on this topic labelled campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that only poorer nations should be concerned by ISDS claims. Predictions that “when companies start to realise the authority bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were dismissed with scepticism.

That warning has come to pass. In the current period, fossil fuel and resource corporations have lodged a record number of cases against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Companies have to date won vast sums through ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP