Hello, Overseas Oligarchs and Companies! Kindly Proceed and Litigate Against the UK for Vast Sums.

What is your perceive our political system works? Perhaps along the lines of this. We elect MPs. They vote on bills. Should a majority is achieved, the bills are enacted as law. Legislation are enforced by the courts. Simple as that. However, that’s how it used to work. Not anymore.

The Emergence of Offshore Tribunals

Today, foreign corporations, along with the billionaires that control them, can sue nation states for the regulations they pass, at private courts staffed by corporate lawyers. The cases are conducted away from public scrutiny. In contrast to domestic courts, these panels provide no opportunity to appeal or judicial review. Ordinary citizens are unable to file a case to them, nor can our government, or even companies operating from this country. They are open only to entities based overseas.

When a secret court finds that a law or policy could harm the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

These sums represent not actual losses but funds the arbitrators conclude the company could potentially have made. The government might be compelled to abandon its policy. It will be hesitant to introducing similar legislation along the same lines, due to the risk of being sued.

A System Running Rampant

Historically high figures of cases are being filed, as companies observe each other, and investment funds fund legal actions in exchange for a cut of the takings. The result? Democratic sovereignty and democracy are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede domestic law and the choices taken by legislatures is that this clause has been inserted – absent public approval, and often in a climate of profound opacity – within international trade agreements.

A Real-World Case: The Whitehaven Coal Mine

A year ago, environmental campaigners won a great victory at the senior court. The judge found that proposals to open the first new deep coal mine in the UK for three decades, in Cumbria, had been wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine would have no consequence on climate commitments. The new government later cancelled the consent the Tories had issued. Currently, this victory could be compromised by an offshore tribunal answering to no one but the entities filing the suit.

In August, a company whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Last week a arbitration panel in the US capital was convened to hear it.

This firm is seeking compensation from the UK for the revenue it would have generated if the mine had received permission to go ahead. The public has no clear indication how much this might be. Who is serving as its counsel challenging the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a foreign company disputes it through an unaccountable private court, and a sitting MP represents its behalf.

A Sanctions Case

On the same day that the court on the mining lawsuit was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know little of the case to date, but it seems likely that he will utilise the ISDS mechanism to fight the sanctions the UK enacted against him following the Russian aggression. He has initiated proceedings against Luxembourg for this reason, seeking $16bn: equivalent to half of nation's annual revenue. Included in the legal team acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists contend that the EU’s hesitation in leveraging immobilised oligarchs' funds as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This remarkable, undemocratic power over democratic administrations may be obstructing the finance Ukraine desperately needs.

Empty Promises and Escalating Costs

We were assured that these scenarios could not occur. Previously, a senior politician, advocating for the biggest and most dangerous of all such treaties, declared: “The UK has signed trade deal after trade deal and there has never been a case in the past.” A consultant on this topic accused activists of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression appeared to be that only poorer nations should be concerned by such legal actions. Cautionary notes that “as corporations start to realise the power they now possess, they will redirect their efforts from the poorer states to the strong ones” were dismissed with widespread derision.

That warning is now a reality. This year, energy and extraction companies have filed a record number of cases against nations rich and poor, contesting – similar to the Whitehaven project – official measures to stop global warming. Firms have so far won $114bn through ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP