Welcome, Overseas Magnates and Firms! Kindly Proceed and Litigate Against the UK for Billions.

Can you understand our system of government operates? It could be something like this. Citizens choose MPs. They vote on bills. If a majority is obtained, the bills pass into law. The law is upheld by the courts. Simple as that. However, that used to be how it once functioned. Not anymore.

The Emergence of Offshore Courts

Nowadays, international firms, along with the billionaires that control them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases are held away from public scrutiny. In contrast to domestic courts, these bodies provide no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, including companies based in this country. They are open only to entities operating from foreign soil.

Should an arbitration panel finds that a law or policy may compromise the corporation’s projected profits, it can award compensation of hundreds of millions, running into billions.

These awards constitute not tangible damages but money the panel members determine the company would perhaps have made. The government may have to abandon its policy. It is discouraged from enacting future policies in that area, for fear of facing litigation.

A Process Growing Exponentially

Historically high figures of cases are being brought, as corporations learn from each other, and private equity bankroll lawsuits in exchange for a share of the awards. The result? National sovereignty and popular rule are becoming unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it can trump national legislation and the decisions enacted by legislatures is that this provision has been incorporated – without democratic mandate, and frequently under a climate of extreme secrecy – within international trade agreements.

A Specific Case: The Cumbrian Coalmine

Twelve months ago, activists secured a significant win at the senior court. The judge ruled that schemes to dig the first deep coalmine in the UK for 30 years, in northwest England, had been wrongly permitted by the outgoing administration, which had accepted the extraordinary assertion that the mine could have zero effect on our carbon budgets. The incoming administration subsequently revoked the permission the former government had issued. Now, this success is under threat by an foreign court accountable to exclusively the entities bringing the case.

During August, a firm whose ultimate owners are based in the offshore financial centre lodged a claim against the UK government. Last week a arbitration panel in the United States was convened to consider the case.

The company is litigating against the UK for the money it would have generated if the mine had been allowed to commence operations. We have no clear indication how much this might be. Which individual is serving as its counsel in opposition to the British government? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The government passes a law, the high court supports it, then a foreign company challenges it through an secretive offshore tribunal, and a elected official works for its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows little of the case so far, but it seems likely that he’ll use the ISDS mechanism to contest the penalties the UK levied against him following the Russian aggression. He has previously started suing a small nation on these grounds, claiming $16bn: half that government’s yearly income. Included in the legal team acting for him in that case? the wife of a former prime minister, wife of the former British prime minister.

Trade specialists argue that the EU’s delay in utilising seized state funds as collateral for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations could be blocking the money Ukraine critically depends on.

False Assurances and Mounting Costs

The public was told that such things wouldn’t happen. Years ago, a former prime minister, promoting the most significant and hazardous of all investment pacts, told us: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” An expert on this matter labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by such legal actions. Warnings that “when companies begin to understand the power they’ve been granted, they will shift their focus from the vulnerable countries to the developed economies” were greeted by widespread derision.

That prediction has now materialised. Recently, fossil fuel and extraction companies have initiated a historic level of cases against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – government attempts to prevent climate breakdown. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP