Greetings, Overseas Tycoons and Corporations! Please Proceed and Litigate Against the UK for Billions of Pounds.

How do you perceive our system of government works? Maybe similar to this. We elect MPs. They legislate on bills. If a majority is obtained, the bills pass into law. The law are enforced by the courts. That's it. Yet, that was how it once functioned. Not anymore.

The Advent of Secret Arbitration Panels

Today, international firms, along with the wealthy individuals who own them, have the power to sue governments for the policies they pass, at private courts made up of commercial attorneys. These proceedings take place behind closed doors. Differing from national judiciaries, these tribunals allow no opportunity to appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, or even companies operating from this country. The door is open solely for businesses operating from foreign soil.

When a secret court determines that a government measure could harm the corporation’s projected profits, it may order financial penalties of hundreds of millions, even billions.

These awards constitute not actual losses but money the arbitrators determine the company could potentially have made. The administration could be forced to drop the legislation. It is hesitant to introducing similar legislation of a similar nature, for fear of being sued.

A System Growing Exponentially

Historically high figures of disputes are being filed, as firms observe each other, and hedge funds finance suits in exchange for a portion of the takings. The outcome? Democratic sovereignty and popular rule are turning into unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede domestic law and the rulings made by elected bodies is that this clause has been inserted – absent public approval, and frequently under an atmosphere of total confidentiality – into international trade agreements.

A Real-World Instance: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners won a great victory at the senior court. The judge found that schemes to open the first new deep coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine would have had no consequence on national carbon targets. The new government later cancelled the licence the Tories had granted. Currently, this legal outcome faces being overturned by an foreign court answering to only the entities filing the suit.

During August, a company whose beneficial owners are based in the tax haven lodged a claim against the UK government. Last week a arbitration panel in Washington DC was convened to consider the case.

This firm is suing the UK for the money it would have generated if the mine had been permitted to proceed. We have no clear indication how much this could amount to. Who is acting on its behalf challenging the state? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The state passes a law, the national judiciary validates it, then a overseas corporation disputes it through an undemocratic private court, and a elected official works for its behalf.

A Sanctions Case

Simultaneously that the panel on the mining lawsuit was convened, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows scarce of the case at present, but it is highly possible that he’ll use the arbitration process to fight the penalties the UK imposed on him subsequent to the Russian aggression. He has started suing another European state on these grounds, claiming $16bn: an amount representing half government’s annual revenue. Among the legal team on his side? a prominent lawyer, spouse of the ex-UK leader.

International law scholars argue that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine stems from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, unaccountable authority over democratic administrations might be preventing the finance Ukraine urgently requires.

False Assurances and Growing Costs

Politicians promised that these events wouldn’t happen. Previously, a senior politician, promoting the most significant and hazardous of all these agreements, told us: “The UK has signed trade deal upon trade deal and there has not been a case in the past.” An expert on this issue accused critics of “exaggeration … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries had to worry about these lawsuits. Warnings that “once firms start to realise the influence they now possess, they will shift their focus from the vulnerable countries to the developed economies” were dismissed with general mockery.

That threat has now materialised. In the current period, fossil fuel and resource corporations have initiated a historic level of claims against nations rich and poor, opposing – similar to the Whitehaven project – state efforts to prevent climate breakdown. Companies have thus far won vast sums by using ISDS, of which energy giants have been awarded the majority. That represents the combined GDP