Greetings, Overseas Oligarchs and Firms! 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. If a majority is obtained, the bills pass into law. Statutes are enforced by the courts. Simple as that. Well, that’s how it operated in the past. No longer.

The Emergence of Shadow Courts

Today, foreign corporations, along with the wealthy individuals who own them, can sue elected administrations for the regulations they pass, at private courts composed of business advocates. The cases take place in secret. Unlike our courts, these bodies grant no avenue for appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, or even enterprises based in this country. The door is open exclusively to entities registered abroad.

Should an arbitration panel finds that a government measure may compromise the corporation’s projected profits, it may order damages of hundreds of millions, even billions.

These sums represent not actual losses but funds the tribunal officials determine the company could potentially have made. The administration could be forced to rescind the measure. It becomes hesitant to passing future laws of a similar nature, for fear of incurring a lawsuit.

A Process Running Rampant

Record numbers of legal actions are being filed, as corporations take cues from each other, and hedge funds bankroll lawsuits in return for a share of the awards. The result? Sovereignty and democratic governance are now too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the rulings enacted by legislatures is that this stipulation has been written – without democratic mandate, and typically amid conditions of extreme secrecy – inside trade treaties.

A Concrete Example: The Whitehaven Coalmine

Twelve months ago, activists achieved a major legal triumph at the high court. The judge determined that proposals to excavate the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were illegally sanctioned by the previous government, which had endorsed the extraordinary assertion that the mine could have no consequence on our carbon budgets. The new government later cancelled the licence the previous administration had granted. Today, this legal outcome faces being overturned by an foreign court reporting to no one but the corporations bringing the case.

In August, a corporate entity whose final controllers reside in the tax haven lodged a claim challenging the UK government. Last week a dispute settlement body in Washington DC was established to consider the case.

The company is suing the UK for the revenue it might have made if the mine had been permitted to go ahead. Citizens have no clear indication how much this sum represents. What legal team is representing it in opposition to the state? An elected representative, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the national judiciary validates it, then a foreign company challenges it through an secretive arbitration panel, and a elected official represents its behalf.

A Sanctions Challenge

Simultaneously that the court on the mining lawsuit was established, it was revealed from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know scarce of the case to date, but it appears probable that he’ll use the ISDS mechanism to fight the penalties the UK enacted against him subsequent to the war in Ukraine. He has previously initiated proceedings against another European state with similar intent, seeking sixteen billion dollars: half that state's annual revenue. Included in the lawyers on his side? the wife of a former prime minister, spouse of the previous PM.

Trade specialists believe that the EU’s delay in utilising seized state funds as collateral for its loan to Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, secretive influence over democratic administrations may be obstructing the funds Ukraine critically depends on.

Empty Promises and Escalating Risks

The public was told that these scenarios were not possible. Previously, a government leader, promoting the largest and riskiest of all such treaties, declared: “The UK has signed trade agreement after trade deal and there has never been a issue in the past.” An expert on this topic accused campaigners of “exaggeration … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that solely developing countries needed to fear such legal actions. Warnings that “when companies grasp the influence bestowed upon them, they will turn their attention from the poorer states to the developed economies” were dismissed with general mockery.

That threat is now a reality. In the current period, oil and gas and extraction companies have filed a record number of claims against nations rich and poor, contesting – like the example of the UK mine – government attempts to halt global warming. Companies have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP