Welcome, Foreign Magnates and Firms! Kindly Come and Litigate Against the UK for Billions.

Can you understand our democratic process operates? Maybe something like this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Legislation are enforced by the courts. Simple as that. Well, that was how it once functioned. Not anymore.

The Advent of Secret Tribunals

Today, overseas companies, along with the wealthy individuals behind them, can sue elected administrations for the laws they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held behind closed doors. Differing from national judiciaries, these bodies grant no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, just as our government, or even companies based in this country. Access is granted only to businesses operating from foreign soil.

Should an arbitration panel finds that a legislative action could harm the corporation’s projected profits, it can award compensation of hundreds of millions, even billions.

These awards constitute not real financial harm but funds the tribunal officials conclude the company would perhaps have made. The state could be forced to rescind the measure. It will be hesitant to enacting future policies of a similar nature, worried about being sued.

A Process Growing Exponentially

Unprecedented levels of cases are being brought, as companies observe each other, and investment funds fund legal actions in return for a portion of the takings. The outcome? Democratic sovereignty and democracy are becoming too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to override national legislation and the choices taken by parliaments is that this clause has been inserted – without public consent, and frequently under an atmosphere of extreme secrecy – inside international trade agreements.

A Concrete Case: The Whitehaven Coalmine

Twelve months ago, a conservation group secured a significant win at the senior court. The justice found that proposals to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were found to be unlawfully approved by the previous government, which had endorsed the questionable argument that the mine would have had zero effect on national carbon targets. The new government then withdrew the consent the previous administration had issued. Today, this victory is under threat by an secret arbitration panel accountable to no one but the corporations bringing the case.

In August, a corporate entity whose ultimate owners reside in the tax haven lodged a claim versus the UK government. The previous week a dispute settlement body in the United States was set up to hear it.

The company is litigating against the UK for the money it could have earned if the mine had been permitted to proceed. We have no clear indication how much this might be. Who is representing it challenging the British government? An elected representative, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The government passes a law, the high court supports it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Lawsuit

Simultaneously that the tribunal on the mining lawsuit was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know scarce of the case to date, but it is highly possible that he will utilise the tribunal to challenge the restrictions the UK enacted against him subsequent to the Russian aggression. He has already filed a claim against Luxembourg with similar intent, demanding $16bn: equivalent to half of nation's yearly income. Included in the lawyers representing him there? the wife of a former prime minister, spouse of the previous PM.

International law scholars contend that the EU’s hesitation in utilising seized oligarchs' funds as guarantee for its loan to Ukraine stems from apprehension in Brussels that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations could be blocking the funds Ukraine critically depends on.

Empty Promises and Growing Risks

The public was told that these scenarios were not possible. Previously, a government leader, promoting the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to trade deal after trade deal and we have never seen a case in the past.” An adviser on this matter labelled critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that solely developing countries needed to fear such legal actions. Warnings that “as corporations begin to understand the influence they now possess, they will redirect their efforts from the vulnerable countries to the developed economies” were dismissed with general mockery.

That threat has come to pass. This year, oil and gas and extraction companies have lodged a unprecedented number of claims against nations rich and poor, challenging – similar to the Cumbrian coalmine – official measures to stop environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have been awarded eighty-four billion dollars. That is equivalent to the combined GDP