Hello, Foreign Tycoons and Firms! Please Proceed and Litigate Against the UK for Billions.

What is your understand our system of government operates? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills pass into law. Statutes is maintained by the courts. End of story. However, that was how it used to work. No longer.

The Advent of Shadow Courts

In the modern era, international firms, or the oligarchs that control them, are able to litigate against elected administrations for the laws they pass, at private courts made up of business advocates. The cases are conducted away from public scrutiny. In contrast to domestic courts, these bodies allow no opportunity to appeal or judicial review. You or I are unable to file a case to them, nor can our government, or even enterprises based in this country. The door is open solely for businesses registered abroad.

Should an arbitration panel finds that a government measure might diminish the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, running into billions.

These sums are based not on actual losses but money the tribunal officials decide the company would perhaps have made. The government may have to rescind the measure. It becomes hesitant to introducing similar legislation along the same lines, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being initiated, as companies learn from each other, and private equity finance suits in return for a cut of the awards. The outcome? Democratic sovereignty and democratic governance are turning into unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override national legislation and the decisions made by parliaments is that this provision has been inserted – without democratic mandate, and typically amid conditions of extreme secrecy – within trade treaties.

A Concrete Case: The Whitehaven Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the senior court. The judge ruled that plans to open the first deep coalmine in the UK for 30 years, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had endorsed the bizarre claim that the mine could have no impact on our carbon budgets. The Labour government subsequently revoked the licence the former government had issued. Currently, this victory faces being overturned by an foreign court accountable to exclusively the corporations filing the suit.

Last August, a firm whose beneficial owners are based in the offshore financial centre filed a lawsuit against the UK government. The previous week a arbitration panel in Washington DC was set up to adjudicate on it.

The company is litigating against the UK for the revenue it would have generated if the mine had received permission to commence operations. Citizens have no idea how much this could amount to. Who is representing it against the British government? A sitting MP, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The government passes a law, the high court validates it, then a overseas corporation contests it through an secretive arbitration panel, and a elected official works for its behalf.

An Oligarch's Challenge

On the same day that the court on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. Details are scarce of the case to date, but it seems likely that he will utilise the tribunal to fight the sanctions the UK enacted against him after the invasion of Ukraine. He has previously filed a claim against a small nation with similar intent, demanding sixteen billion dollars: half that government’s annual revenue. Part of the counsel representing him there? the wife of a former prime minister, wife of the previous PM.

Legal experts argue that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its aid for Ukraine stems from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, secretive influence over elected governments may be obstructing the money Ukraine desperately needs.

Empty Promises and Escalating Risks

The public was told that such things could not occur. Previously, a senior politician, advocating for the largest and riskiest of all investment pacts, told us: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” An expert on this topic labelled activists of “scaremongering … in reality, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “when companies grasp the influence they now possess, they will redirect their efforts from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction is now a reality. This year, fossil fuel and mining firms have initiated a record number of claims against nations rich and poor, opposing – as in the case of the UK mine – government attempts to halt environmental catastrophe. Firms have to date won $114bn through ISDS, of which energy giants have been awarded the majority. That equates to the combined GDP