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

Can you perceive our system of government works? Maybe along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills become law. The law is upheld by the courts. Simple as that. However, that was how it used to work. No longer.

The Advent of Shadow Courts

Today, overseas companies, and the oligarchs that control them, can sue elected administrations for the laws they pass, at offshore tribunals made up of business advocates. These proceedings are held away from public scrutiny. Differing from national judiciaries, these tribunals allow no right of appeal or legal review. The general public cannot take a case to them, nor can our government, including enterprises headquartered in this country. Access is granted solely for businesses based overseas.

When a secret court finds that a law or policy could harm the corporation’s projected profits, it can award financial penalties of vast sums, potentially billions.

These sums constitute not tangible damages but compensation the panel members decide the company might otherwise have made. The government might be compelled to abandon its policy. It is hesitant to passing future laws of a similar nature, for fear of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Unprecedented levels of legal actions are being filed, as firms take cues from each other, and investment funds finance suits for a share of a cut of the awards. The consequence? National sovereignty and democracy are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the rulings enacted by legislatures is that this stipulation has been inserted – without democratic mandate, and frequently under an atmosphere of profound opacity – into international trade agreements.

A Real-World Instance: The Cumbrian Coal Mine

Last year, environmental campaigners won a great victory at the High Court. The judge ruled that schemes to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved by the previous government, which had accepted the questionable argument that the mine would have had no consequence on national carbon targets. The new government subsequently revoked the permission the former government had approved. Now, this legal outcome faces being overturned by an secret arbitration panel reporting to no one but the entities petitioning it.

During August, a firm whose final controllers reside in the tax haven initiated proceedings versus the UK government. Last week a arbitration panel in Washington DC was convened to consider the case.

This firm is suing the UK for the money it would have generated if the mine had received permission to proceed. Citizens have little idea how much this could amount to. What legal team is serving as its counsel against the UK administration? A sitting MP, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The government passes a law, the high court upholds it, then a overseas corporation contests it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Case

Concurrently that the tribunal on the coal mine dispute was convened, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows little of the case to date, but it appears probable that he will utilise the tribunal to fight the sanctions the UK levied against him after the invasion of Ukraine. He has previously filed a claim against Luxembourg for this reason, seeking $16bn: equivalent to half of government’s yearly income. Among the legal team acting for him in that case? Cherie Blair, wife of the ex-UK leader.

Trade specialists believe that the EU’s hesitation in utilising seized Russian assets as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This unprecedented, secretive influence over sovereign states may be obstructing the money Ukraine urgently requires.

Misleading Claims and Escalating Threats

We were assured that such things wouldn’t happen. Years ago, a senior politician, advocating for the largest and riskiest of all these agreements, declared: “Britain has agreed to investment treaty after trade deal and there has never been a case in the past.” An adviser on this issue labelled campaigners of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear these lawsuits. Warnings that “once firms start to realise the power bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were dismissed with widespread derision.

That prediction has now materialised. Recently, oil and gas and mining firms have lodged a historic level of cases against nations rich and poor, challenging – similar to the Cumbrian coalmine – government attempts to prevent climate breakdown. Firms have to date won $114bn via ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That represents the combined GDP