Greetings, Overseas Oligarchs and Corporations! Please Proceed and Litigate Against the UK for Billions.

How do you perceive our democratic process functions? Perhaps similar to this. We elect MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. Statutes is upheld by the courts. That's it. Well, that was how it once functioned. Not anymore.

The Advent of Offshore Courts

Nowadays, international firms, along with the billionaires behind them, have the power to sue elected administrations for the regulations they pass, at private courts staffed by commercial attorneys. The cases take place behind closed doors. In contrast to domestic courts, these bodies grant no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, nor can our government, including companies headquartered in this country. Access is granted only to entities registered abroad.

Should an arbitration panel rules that a legislative action could harm the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, potentially billions.

These awards are based not on actual losses but money the tribunal officials decide the company could potentially have made. The state could be forced to rescind the measure. It will be hesitant to introducing similar legislation of a similar nature, worried about incurring a lawsuit.

A System Running Rampant

Record numbers of disputes are being filed, as corporations learn from each other, and hedge funds finance suits for a share of a portion of the takings. The outcome? National sovereignty and popular rule are becoming unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the decisions made by parliaments is that this provision has been incorporated – absent public approval, and frequently under conditions of total confidentiality – into trade treaties.

A Concrete Example: The Cumbrian Coal Mine

Last year, activists achieved a major legal triumph at the senior court. The judge determined that plans to dig the first new deep coal mine in the UK for three decades, in Cumbria, were wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine could have no impact on our carbon budgets. The new government then withdrew the permission the Tories had approved. Now, this success faces being overturned by an offshore tribunal reporting to only the entities petitioning it.

During August, a corporate entity whose final controllers reside in the tax haven initiated proceedings versus the UK government. Recently a arbitration panel in the US capital was established to consider the case.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been allowed to proceed. Citizens have no clear indication how much this might be. Who is serving as its counsel in opposition to the UK administration? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The administration enacts a policy, the high court upholds it, then a foreign company challenges it through an unaccountable private court, and a elected official acts on its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the coal mine dispute was established, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case so far, but it seems likely that he’ll use the arbitration process to challenge the sanctions the UK levied against him following the Russian aggression. He has previously filed a claim against Luxembourg for this reason, claiming $16bn: half that government’s yearly budget. Part of the legal team acting for him in that case? Cherie Blair, married to the previous PM.

Trade specialists contend that the EU’s delay in using frozen state funds as collateral for its aid for Ukraine is due to apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments may be obstructing the finance Ukraine urgently requires.

Empty Promises and Escalating Threats

The public was told that these events wouldn’t happen. Previously, a senior politician, championing the largest and riskiest of all these agreements, stated: “Britain has agreed to trade deal after trade deal and there has never been a problem in the past.” A consultant on this matter described campaigners of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “once firms begin to understand the power they now possess, they will shift their focus from the vulnerable countries to the strong ones” were greeted by scepticism.

That prediction is now a reality. In the current period, energy and extraction companies have lodged a unprecedented number of cases against nations both wealthy and developing, contesting – as in the case of the Whitehaven project – official measures to stop climate breakdown. Corporations have to date won vast sums by using ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP