Greetings, International Oligarchs and Corporations! Please Come and Litigate Against the UK for Billions.

What is your reckon our system of government functions? It could be similar to this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills become law. The law is upheld by the courts. End of story. However, that used to be how it operated in the past. Those days are over.

The Rise of Secret Tribunals

In the modern era, overseas companies, along with the wealthy individuals who own them, are able to litigate against elected administrations for the laws they pass, at private courts composed of commercial attorneys. Such disputes are held in secret. Differing from national judiciaries, these tribunals allow no right of appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, or even businesses headquartered in this country. Access is granted exclusively to corporations based overseas.

Should an arbitration panel rules that a legislative action may compromise the corporation’s projected profits, it can award damages of hundreds of millions, running into billions.

These sums are based not on real financial harm but money the tribunal officials conclude the company would perhaps have made. The administration could be forced to rescind the measure. It is deterred from passing future laws along the same lines, for fear of being sued.

A Mechanism Growing Exponentially

Historically high figures of legal actions are being brought, as firms learn from each other, and investment funds fund legal actions for a share of a cut of the takings. The consequence? Sovereignty and popular rule are now too costly.

The process is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the decisions enacted by legislatures is that this stipulation has been inserted – without democratic mandate, and often in conditions of total confidentiality – within bilateral investment treaties.

A Real-World Case: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The judge determined that proposals to dig the first deep coalmine in the UK for a generation, in Cumbria, were wrongly permitted by the previous government, which had accepted the extraordinary assertion that the mine would have zero effect on our carbon budgets. The Labour government later cancelled the licence the former government had issued. Today, this legal outcome is under threat by an secret arbitration panel reporting to only the companies petitioning it.

Last August, a company whose beneficial owners reside in the tax haven lodged a claim versus the UK government. The previous week a tribunal in the United States was established to adjudicate on it.

The claimant is suing the UK for the money it could have earned if the mine had been allowed to go ahead. Citizens have no clear indication how much this sum represents. Who is representing it against the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The state passes a law, the national judiciary supports it, then a overseas corporation contests it through an secretive offshore tribunal, and a member of our parliament acts on its behalf.

The Russian Case

Concurrently that the tribunal on the coal mine dispute was appointed, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. Details are little of the case at present, but it is highly possible that he may employ the ISDS mechanism to challenge the restrictions the UK enacted against him subsequent to the war in Ukraine. He has previously filed a claim against a small nation on these grounds, demanding $16bn: an amount representing half state's annual revenue. Included in the counsel representing him there? the wife of a former prime minister, spouse of the ex-UK leader.

International law scholars contend that the EU’s delay in using frozen oligarchs' funds as security for its aid for Ukraine stems from apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This unprecedented, secretive influence over elected governments may be obstructing the money Ukraine desperately needs.

Empty Promises and Growing Costs

Politicians promised that these scenarios wouldn’t happen. Years ago, a senior politician, advocating for the largest and riskiest of all these agreements, declared: “We’ve signed investment treaty after trade deal and there has not been a case in the past.” A consultant on this issue accused critics of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries had to worry about these lawsuits. Predictions that “as corporations grasp the power bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were greeted by general mockery.

That prediction has now materialised. Recently, oil and gas and resource corporations have initiated a record number of suits against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – government attempts to stop climate breakdown. Companies have to date won $114bn through ISDS, of which oil majors have obtained the majority. That equates to the combined GDP