Welcome, Overseas Oligarchs and Companies! Please Come and Sue the UK for Billions of Pounds.

What is your understand our democratic process works? Perhaps similar to this. We elect MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. Legislation is maintained by the courts. That's it. Well, that’s how it once functioned. Not anymore.

The Advent of Secret Arbitration Panels

Nowadays, international firms, and the billionaires behind them, can sue elected administrations for the regulations they pass, at private courts made up of corporate lawyers. These proceedings take place in secret. Differing from national judiciaries, these panels allow no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, including businesses headquartered in this country. Access is granted solely for corporations based overseas.

When a secret court rules that a legislative action might diminish the corporation’s projected profits, it may order financial penalties of vast sums, running into billions.

These awards represent not tangible damages but funds the tribunal officials decide the company would perhaps have made. The administration might be compelled to rescind the measure. It will be deterred from introducing similar legislation of a similar nature, due to the risk of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of cases are being initiated, as corporations observe each other, and investment funds bankroll lawsuits in exchange for a share of the takings. The result? Sovereignty and popular rule are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the rulings enacted by parliaments is that this provision has been incorporated – without public consent, and typically amid conditions of profound opacity – within international trade agreements.

A Concrete Case: The Cumbrian Coal Mine

Twelve months ago, activists achieved a major legal triumph at the High Court. The presiding officer ruled that schemes to open the first major coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine could have no consequence on climate commitments. The new government later cancelled the licence the previous administration had granted. Now, this legal outcome faces being overturned by an offshore tribunal reporting to exclusively the corporations bringing the case.

In August, a corporate entity whose beneficial owners are located in the tax haven initiated proceedings challenging the UK government. Recently a arbitration panel in the US capital was set up to consider the case.

The company is litigating against the UK for the profits it might have made if the mine had been permitted to go ahead. Citizens have no idea how much this could amount to. Who is acting on its behalf challenging the UK administration? A sitting MP, and former attorney-general in the Conservative government, that great patriot Sir Geoffrey Cox. The administration makes a decision, the national judiciary validates it, then a international entity contests it through an secretive arbitration panel, and a elected official represents its behalf.

The Russian Challenge

Simultaneously that the tribunal on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. Details are nothing of the case so far, but it appears probable that he may employ the arbitration process to fight the restrictions the UK enacted against him subsequent to the Russian aggression. He has initiated proceedings against another European state for this reason, demanding a colossal sum: half that nation's yearly income. Among the counsel on his side? the wife of a former prime minister, spouse of the ex-UK leader.

Trade specialists argue that the EU’s hesitation in leveraging immobilised state funds as security for its loan to Ukraine is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, undemocratic power over elected governments may be obstructing the funds Ukraine desperately needs.

Misleading Claims and Mounting Costs

Politicians promised that such things wouldn’t happen. Years ago, a senior politician, advocating for the biggest and most dangerous of all these agreements, declared: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” A consultant on this issue accused campaigners of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression seemed to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “when companies grasp the authority they’ve been granted, they will redirect their efforts from the poorer states to the developed economies” were greeted by general mockery.

That threat is now a reality. This year, oil and gas and extraction companies have lodged a unprecedented number of suits against nations both wealthy and developing, challenging – like the example of the Whitehaven project – official measures to prevent global warming. Corporations have so far won vast sums via ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP