Welcome, International Oligarchs and Corporations! Kindly Come and Take Legal Action Against the UK for Billions.

Can you reckon our democratic process functions? Maybe something like this. We elect MPs. They vote on bills. When a majority is obtained, the bills become law. The law is upheld by the courts. That's it. Well, that was how it used to work. Those days are over.

The Emergence of Offshore Arbitration Panels

Nowadays, international firms, and the billionaires that control them, have the power to sue governments for the regulations they pass, at secret arbitration panels staffed by business advocates. Such disputes are conducted in secret. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. You or I are unable to file a case to them, just as our government, or even businesses headquartered in this country. They are open only to entities registered abroad.

If a tribunal finds that a government measure may compromise the corporation’s expected profits, it may order financial penalties of vast sums, potentially billions.

These awards constitute not tangible damages but compensation the tribunal officials determine the company might otherwise have made. The administration may have to drop the legislation. It will be hesitant to enacting future policies of a similar nature, worried about being sued.

A Mechanism Running Rampant

Historically high figures of cases are being brought, as corporations take cues from each other, and investment funds fund legal actions in return for a cut of the takings. The result? Sovereignty and democracy are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the rulings taken by parliaments is that this stipulation has been inserted – absent public approval, and frequently under a climate of extreme secrecy – within international trade agreements.

A Specific Case: The Cumbrian Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the high court. The justice ruled that plans to excavate the first major coal mine in the UK for a generation, in northwest England, were unlawfully approved by the Conservative government, which had agreed to the questionable argument that the mine could have no consequence on our carbon budgets. The incoming administration subsequently revoked the consent the previous administration had granted. Now, this victory could be compromised by an secret arbitration panel answering to exclusively the corporations filing the suit.

Last August, a company whose final controllers are located in the tax haven lodged a claim against the UK government. The previous week a dispute settlement body in Washington DC was convened to adjudicate on it.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to proceed. The public has no idea how much this might be. What legal team is representing it challenging the state? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The state makes a decision, the national judiciary supports it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Case

Simultaneously that the court on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know scarce of the case at present, but it seems likely that he will utilise the tribunal to contest the penalties the UK levied against him following the Russian aggression. He has filed a claim against Luxembourg on these grounds, demanding a colossal sum: equivalent to half of nation's annual revenue. Part of the counsel on his side? a prominent lawyer, wife of the former British prime minister.

Legal experts believe that the EU’s procrastination in utilising seized state funds as security for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This unprecedented, undemocratic power over sovereign states might be preventing the finance Ukraine urgently requires.

False Assurances and Growing Threats

We were assured that these scenarios could not occur. In 2014, a government leader, promoting the largest and riskiest of all such treaties, declared: “The UK has signed investment treaty upon trade deal and there has never been a problem in the past.” An adviser on this topic labelled campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries needed to fear ISDS claims. Cautionary notes that “when companies begin to understand the authority they’ve been granted, they will redirect their efforts from the poorer states to the developed economies” were dismissed with widespread derision.

That prediction has come to pass. Recently, fossil fuel and resource corporations have lodged a historic level of suits against nations both wealthy and developing, opposing – like the example of the Whitehaven project – state efforts to stop climate breakdown. Firms have so far won $114bn via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP