Hello, Overseas Magnates and Corporations! Kindly Proceed and Sue the UK for Billions of Pounds.

What is your understand our system of government works? It could be something like this. Citizens choose MPs. They vote on bills. Should a majority is achieved, the bills pass into law. Statutes are enforced by the courts. End of story. However, that was how it used to work. Those days are over.

The Emergence of Secret Tribunals

Nowadays, overseas companies, and the oligarchs that control them, can sue elected administrations for the regulations they pass, at offshore tribunals made up of business advocates. Such disputes are held behind closed doors. In contrast to domestic courts, these tribunals allow no right of appeal or oversight by judges. The general public are barred from bringing a case to them, just as our government, or even enterprises headquartered in this country. Access is granted exclusively to entities based overseas.

When a secret court determines that a legislative action could harm the corporation’s projected profits, it can award compensation of vast sums, even billions.

This compensation constitute not real financial harm but compensation the panel members conclude the company would perhaps have made. The government might be compelled to abandon its policy. It will be deterred from enacting future policies along the same lines, worried about being sued.

A System Growing Exponentially

Unprecedented levels of cases are being filed, as firms learn from each other, and private equity finance suits for a share of a portion of the takings. The result? Democratic sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the rulings taken by parliaments is that this provision has been written – absent public approval, and typically amid a climate of total confidentiality – inside international trade agreements.

A Specific Example: The UK Coalmine

A year ago, activists secured a significant win at the senior court. The justice determined that schemes to excavate the first deep coalmine in the UK for a generation, in northwest England, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine could have no consequence on national carbon targets. The incoming administration subsequently revoked the permission the former government had granted. Today, this success faces being overturned by an secret arbitration panel answering to only the companies petitioning it.

Last August, a corporate entity whose beneficial owners are located in the Cayman Islands initiated proceedings against the UK government. The previous week a arbitration panel in the US capital was established to adjudicate on it.

The company is litigating against the UK for the money it would have generated if the mine had been permitted to commence operations. The public has no idea how much this could amount to. Which individual is serving as its counsel in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The government makes a decision, the high court upholds it, then a foreign company challenges it through an undemocratic private court, and a sitting MP works for its behalf.

A Sanctions Lawsuit

On the same day that the panel on the coalmine case was convened, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. Details are scarce of the case so far, but it appears probable that he may employ the arbitration process to fight the restrictions the UK enacted against him subsequent to the Russian aggression. He has previously filed a claim against another European state on these grounds, claiming sixteen billion dollars: half that nation's yearly income. Part of the lawyers acting for him in that case? the wife of a former prime minister, spouse of the former British prime minister.

Trade specialists argue that the EU’s procrastination in using frozen state funds as security for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This unprecedented, undemocratic power over sovereign states could be blocking the finance Ukraine urgently requires.

False Assurances and Growing Risks

Politicians promised that such things could not occur. Years ago, a senior politician, championing the largest and riskiest of all these agreements, declared: “Britain has agreed to trade agreement after trade deal and there has never been a case in the past.” A consultant on this topic described campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries needed to fear these lawsuits. Warnings that “once firms begin to understand the influence bestowed upon them, they will turn their attention from the poorer states to the developed economies” were met with scepticism.

That prediction is now a reality. In the current period, fossil fuel and mining firms have initiated a unprecedented number of suits against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – official measures to prevent global warming. Corporations have so far won vast sums through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP