Hello, Foreign Oligarchs and Corporations! Kindly Proceed and Litigate Against the UK for Vast Sums.

What is your perceive our system of government works? It could be along the lines of this. We elect MPs. They vote on bills. Should a majority is achieved, the bills become law. Statutes is maintained by the courts. End of story. Well, that was how it once functioned. Not anymore.

The Advent of Offshore Tribunals

Today, overseas companies, or the wealthy individuals who own them, can sue nation states for the policies they pass, at secret arbitration panels composed of commercial attorneys. The cases take place away from public scrutiny. Differing from national judiciaries, these panels allow no avenue for appeal or judicial review. You or I are unable to file a case to them, nor can our government, or even enterprises operating from this country. They are open only to corporations operating from foreign soil.

Should an arbitration panel determines that a law or policy may compromise the corporation’s projected profits, it can award damages of vast sums, even billions.

These sums are based not on actual losses but funds the panel members conclude the company would perhaps have made. The government could be forced to rescind the measure. It is hesitant to passing future laws in that area, due to the risk of facing litigation.

A Process Spiralling Out of Control

Record numbers of disputes are being initiated, as corporations observe each other, and hedge funds bankroll lawsuits in exchange for a share of the settlements. The consequence? Democratic sovereignty and popular rule are turning into prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump a country's own laws and the rulings enacted by legislatures is that this stipulation has been inserted – absent public approval, and frequently under a climate of profound opacity – inside bilateral investment treaties.

A Real-World Instance: The Whitehaven Coalmine

Last year, a conservation group achieved a major legal triumph at the high court. The presiding officer found that schemes to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have had no consequence on climate commitments. The new government later cancelled the licence the Tories had issued. Now, this victory could be compromised by an secret arbitration panel answering to no one but the companies filing the suit.

During August, a firm whose final controllers are based in the Cayman Islands initiated proceedings against the UK government. Last week a tribunal in Washington DC was established to adjudicate on it.

The company is litigating against the UK for the profits it could have earned if the mine had been allowed to commence operations. We have no idea how much this could amount to. What legal team is acting on its behalf against the state? An elected representative, and former attorney-general in the previous government, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the domestic court upholds it, then a international entity challenges it through an secretive private court, and a member of our parliament represents its behalf.

An Oligarch's Case

On the same day that the court on the mining lawsuit was appointed, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know scarce of the case to date, but it seems likely that he will utilise the ISDS mechanism to challenge the penalties the UK levied against him after the Russian aggression. He has already started suing a small nation with similar intent, claiming $16bn: an amount representing half state's annual revenue. Among the lawyers acting for him in that case? Cherie Blair, wife of the previous PM.

Trade specialists argue that the EU’s delay in utilising seized state funds as collateral for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This unprecedented, undemocratic power over elected governments could be blocking the money Ukraine critically depends on.

Misleading Claims and Mounting Costs

Politicians promised that these scenarios were not possible. Years ago, a senior politician, advocating for the largest and riskiest of all such treaties, told us: “Britain has agreed to investment treaty upon trade deal and there has not been a case in the past.” An expert on this issue accused critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by such legal actions. Cautionary notes that “once firms grasp the power they’ve been granted, they will shift their focus from the poorer states to the wealthy nations” were greeted by widespread derision.

That prediction has come to pass. This year, oil and gas and extraction companies have lodged a record number of cases against nations across the economic spectrum, opposing – like the example of the UK mine – government attempts to stop climate breakdown. Firms have thus far won vast sums via ISDS, of which oil majors have been awarded $84bn. That is equivalent to the combined GDP