Greetings, Foreign Oligarchs and Firms! Please Come and Take Legal Action Against the UK for Billions of Pounds.

What is your perceive our political system works? Maybe something like this. We elect MPs. They debate and pass bills. If a majority is secured, the bills are enacted as law. The law is upheld by the courts. Simple as that. Yet, that’s how it operated in the past. Those days are over.

The Rise of Shadow Courts

In the modern era, international firms, along with the wealthy individuals behind them, have the power to sue nation states for the policies they pass, at private courts made up of corporate lawyers. These proceedings are held away from public scrutiny. In contrast to domestic courts, these tribunals provide no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, including companies based in this country. Access is granted only to entities operating from foreign soil.

Should an arbitration panel rules that a legislative action might diminish the corporation’s projected profits, it has the power to grant compensation of vast sums, even billions.

This compensation are based not on actual losses but money the tribunal officials decide the company might otherwise have made. The government might be compelled to abandon its policy. It becomes deterred from introducing similar legislation along the same lines, worried about facing litigation.

A System Growing Exponentially

Unprecedented levels of disputes are being initiated, as companies take cues from each other, and investment funds fund legal actions in return for a cut of the takings. The consequence? Sovereignty and democracy are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the choices taken by parliaments is that this provision has been incorporated – absent public approval, and often in an atmosphere of profound opacity – within international trade agreements.

A Concrete Example: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the High Court. The presiding officer found that schemes to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had endorsed the questionable argument that the mine would have no consequence on national carbon targets. The new government later cancelled the permission the Tories had granted. Now, this victory could be compromised by an foreign court answering to no one but the companies bringing the case.

Last August, a firm whose ultimate owners are located in the tax haven initiated proceedings against the UK government. The previous week a arbitration panel in the US capital was set up to consider the case.

This firm is suing the UK for the money it could have earned if the mine had received permission to commence operations. We have little idea how much this sum represents. Who is serving as its counsel challenging the British government? A member of parliament, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The state passes a law, the high court validates it, then a international entity disputes it through an unaccountable offshore tribunal, and a elected official represents its behalf.

An Oligarch's Case

Concurrently that the court on the mining lawsuit was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. We know scarce of the case at present, but it seems likely that he may employ the tribunal to challenge the penalties the UK enacted against him subsequent to the invasion of Ukraine. He has previously filed a claim against a small nation for this reason, claiming sixteen billion dollars: half that state's annual revenue. Part of the legal team representing him there? Cherie Blair, married to the previous PM.

International law scholars believe that the EU’s procrastination in using frozen state funds as guarantee for its financial support package stems from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over democratic administrations could be blocking the funds Ukraine critically depends on.

Empty Promises and Escalating Costs

We were assured that these scenarios were not possible. Previously, a former prime minister, advocating for the largest and riskiest of all such treaties, declared: “Britain has agreed to trade deal after trade deal and we have never seen a issue in the past.” A consultant on this matter accused activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that solely developing countries had to worry about these lawsuits. Warnings that “as corporations begin to understand the influence they’ve been granted, they will turn their attention from the poorer states to the wealthy nations” were met with scepticism.

That warning has come to pass. In the current period, fossil fuel and resource corporations have lodged a historic level of cases against nations rich and poor, challenging – like the example of the Whitehaven project – state efforts to stop environmental catastrophe. Corporations have to date won $114bn via ISDS, of which oil majors have obtained $84bn. That represents the combined GDP