Greetings, Foreign Oligarchs and Firms! Kindly Proceed and Sue the UK for Billions of Pounds.

How do you perceive our system of government operates? It could be along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills become law. Legislation is upheld by the courts. End of story. Well, that was how it operated in the past. Those days are over.

The Emergence of Shadow Tribunals

In the modern era, overseas companies, or the oligarchs behind them, are able to litigate against nation states for the laws they pass, at secret arbitration panels made up of commercial attorneys. Such disputes are held away from public scrutiny. In contrast to domestic courts, these tribunals provide no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, including enterprises based in this country. They are open solely for entities based overseas.

When a secret court finds that a legislative action could harm the corporation’s expected profits, it can award damages of hundreds of millions, running into billions.

This compensation are based not on tangible damages but funds the panel members decide the company could potentially have made. The government may have to drop the legislation. It is hesitant to introducing similar legislation along the same lines, worried about being sued.

A Mechanism Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as firms take cues from each other, and investment funds bankroll lawsuits in exchange for a share of the settlements. The result? Sovereignty and democracy are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump domestic law and the decisions taken by parliaments is that this provision has been incorporated – without public consent, and frequently under conditions of total confidentiality – into trade treaties.

A Real-World Case: The Cumbrian Coalmine

Last year, activists secured a significant win at the High Court. The presiding officer ruled that schemes to open the first major coal mine in the UK for a generation, in northwest England, had been wrongly permitted by the Conservative government, which had agreed to the questionable argument that the mine could have zero effect on our carbon budgets. The Labour government subsequently revoked the consent the former government had approved. Currently, this victory is under threat by an offshore tribunal reporting to no one but the corporations filing the suit.

Last August, a firm whose final controllers are located in the Cayman Islands filed a lawsuit against the UK government. Recently a tribunal in the US capital was convened to hear it.

The claimant is litigating against the UK for the revenue it might have made if the mine had been allowed to proceed. We have little idea how much this sum represents. Who is representing it against the state? A member of parliament, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official works for its behalf.

The Russian Lawsuit

On the same day that the tribunal on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case so far, but it is highly possible that he may employ the ISDS mechanism to challenge the restrictions the UK levied against him subsequent to the Russian aggression. He has already started suing Luxembourg for this reason, demanding $16bn: an amount representing half state's yearly budget. Included in the legal team on his side? Cherie Blair, wife of the former British prime minister.

Trade specialists contend that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its loan to Ukraine stems from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, secretive influence over democratic administrations may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Mounting Threats

Politicians promised that these events wouldn’t happen. Years ago, a senior politician, advocating for the most significant and hazardous of all such treaties, declared: “We’ve signed investment treaty after trade deal and we have never seen a problem in the past.” A consultant on this topic labelled critics of “exaggeration … in reality, ISDS barely touches the UK much”. The overall message seemed to be that only poorer nations needed to fear such legal actions. Predictions that “as corporations grasp the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were dismissed with general mockery.

That prediction has come to pass. This year, fossil fuel and resource corporations have initiated a unprecedented number of claims against nations across the economic spectrum, challenging – like the example of the Whitehaven project – government attempts to stop environmental catastrophe. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP