Welcome, Overseas Tycoons and Companies! Please Come and Sue the UK for Vast Sums.

What is your perceive our system of government functions? Maybe something like this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills become law. The law are enforced by the courts. Simple as that. Well, that used to be how it operated in the past. Not anymore.

The Emergence of Secret Tribunals

In the modern era, foreign corporations, or the billionaires that control them, have the power to sue governments for the laws they pass, at private courts composed of business advocates. The cases take place in secret. Unlike our courts, these panels grant no avenue for appeal or legal review. The general public are unable to file a case to them, nor can our government, including companies operating from this country. The door is open only to businesses based overseas.

Should an arbitration panel finds that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions, even billions.

These awards are based not on actual losses but funds the panel members determine the company might otherwise have made. The administration could be forced to abandon its policy. It will be hesitant to enacting future policies in that area, due to the risk of facing litigation.

A Process Running Rampant

Record numbers of cases are being initiated, as firms take cues from each other, and investment funds bankroll lawsuits for a share of a cut of the settlements. The outcome? National sovereignty and democratic governance are now too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override domestic law and the choices made by elected bodies is that this clause has been written – absent public approval, and typically amid a climate of profound opacity – into trade treaties.

A Specific Case: The Whitehaven Coal Mine

Last year, a conservation group won a great victory at the High Court. The judge found that schemes to dig the first major coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had endorsed the extraordinary assertion that the mine could have no consequence on our carbon budgets. The incoming administration then withdrew the licence the previous administration had issued. Today, this legal outcome faces being overturned by an offshore tribunal answering to only the companies petitioning it.

During August, a firm whose ultimate owners are located in the tax haven lodged a claim against the UK government. Recently a tribunal in the US capital was set up to hear it.

This firm is suing the UK for the revenue it could have earned if the mine had received permission to go ahead. Citizens have little idea how much this might be. What legal team is representing it against the UK administration? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The state passes a law, the domestic court upholds it, then a foreign company challenges it through an secretive private court, and a elected official represents its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. Details are scarce of the case at present, but it appears probable that he may employ the ISDS mechanism to fight the penalties the UK enacted against him following the invasion of Ukraine. He has already initiated proceedings against a small nation with similar intent, demanding a colossal sum: equivalent to half of government’s yearly budget. Included in the legal team on his side? Cherie Blair, spouse of the ex-UK leader.

International law scholars believe that the EU’s delay in leveraging immobilised Russian assets as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This unprecedented, unaccountable authority over democratic administrations could be blocking the money Ukraine critically depends on.

Empty Promises and Mounting Costs

We were assured that these scenarios wouldn’t happen. Previously, a government leader, championing the biggest and most dangerous of all such treaties, declared: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” A consultant on this matter accused campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states had to worry about ISDS claims. Cautionary notes that “as corporations start to realise the authority they’ve been granted, they will shift their focus from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. Recently, energy and extraction companies have initiated a unprecedented number of claims against nations rich and poor, opposing – as in the case of the Cumbrian coalmine – official measures to stop environmental catastrophe. Firms have to date won $114bn by using ISDS, of which energy giants have secured the majority. That represents the combined GDP