Greetings, Foreign Tycoons and Companies! Kindly Proceed and Take Legal Action Against the UK for Billions.

Can you perceive our political system works? Perhaps along the lines of this. We elect MPs. They legislate on bills. When a majority is obtained, the bills become law. Legislation is upheld by the courts. Simple as that. Yet, that was how it once functioned. Not anymore.

The Emergence of Offshore Tribunals

In the modern era, overseas companies, and the wealthy individuals behind them, have the power to sue elected administrations for the regulations they pass, at private courts staffed by business advocates. Such disputes are held behind closed doors. Differing from national judiciaries, these tribunals grant no avenue for appeal or legal review. You or I are unable to file a case to them, just as our government, including businesses headquartered in this country. They are open solely for entities registered abroad.

When a secret court finds that a government measure might diminish the corporation’s projected profits, it can award damages of hundreds of millions of pounds, running into billions.

This compensation represent not actual losses but money the tribunal officials conclude the company could potentially have made. The government could be forced to rescind the measure. It will be hesitant to introducing similar legislation of a similar nature, for fear of incurring a lawsuit.

A System Running Rampant

Unprecedented levels of legal actions are being filed, as corporations take cues from each other, and investment funds fund legal actions in exchange for a cut of the settlements. The result? National sovereignty and democratic governance are now unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede national legislation and the rulings taken by elected bodies is that this clause has been written – without democratic mandate, and frequently under conditions of total confidentiality – inside trade treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, activists won a great victory at the High Court. The justice determined that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the previous government, which had endorsed the bizarre claim that the mine would have no impact on our carbon budgets. The Labour government subsequently revoked the consent the previous administration had issued. Now, this victory could be compromised by an foreign court answering to only the corporations filing the suit.

During August, a company whose final controllers reside in the tax haven lodged a claim against the UK government. Recently a dispute settlement body in Washington DC was convened to hear it.

The claimant is litigating against the UK for the revenue it might have made if the mine had received permission to commence operations. Citizens have no idea how much this might be. What legal team 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 Sir Geoffrey Cox. The administration passes a law, the high court supports it, then a foreign company disputes it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

The Russian Lawsuit

On the same day that the tribunal on the mining lawsuit was established, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case so far, but it seems likely that he will utilise the ISDS mechanism to challenge the sanctions the UK levied against him after the Russian aggression. He has already initiated proceedings against another European state with similar intent, seeking $16bn: an amount representing half nation's yearly income. Among the legal team on his side? the wife of a former prime minister, wife of the ex-UK leader.

International law scholars contend that the EU’s hesitation in leveraging immobilised state funds as security for its loan to Ukraine is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over sovereign states might be preventing the funds Ukraine desperately needs.

Empty Promises and Mounting Risks

We were assured that these events wouldn’t happen. Previously, a senior politician, advocating for the most significant and hazardous of all such treaties, stated: “Britain has agreed to trade deal after trade deal and we have never seen a issue in the past.” An expert on this topic described campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The overall message appeared to be that exclusively weaker states had to worry about these lawsuits. Predictions 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 met with scepticism.

That warning has come to pass. This year, energy and resource corporations have filed a unprecedented number of suits against nations across the economic spectrum, opposing – as in the case of the Whitehaven project – official measures to stop global warming. Companies have thus far won vast sums by using ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP