Greetings, International Magnates and Firms! Kindly Proceed and Litigate Against the UK for Billions of Pounds.

What is your understand our democratic process functions? Perhaps similar to this. We elect MPs. They debate and pass bills. Should a majority is achieved, the bills become law. The law is upheld by the courts. That's it. Well, that’s how it used to work. Not anymore.

The Rise of Shadow Arbitration Panels

Nowadays, international firms, and the oligarchs behind them, can sue governments for the laws they pass, at offshore tribunals composed of corporate lawyers. Such disputes take place behind closed doors. Unlike our courts, these bodies provide no avenue for appeal or judicial review. You or I are barred from bringing a case to them, just as our government, or even enterprises based in this country. Access is granted solely for businesses based overseas.

When a secret court rules that a law or policy could harm the corporation’s anticipated profits, it can award damages of vast sums, even billions.

This compensation are based not on tangible damages but compensation the panel members determine the company could potentially have made. The administration might be compelled to abandon its policy. It is hesitant to passing future laws along the same lines, due to the risk of incurring a lawsuit.

A Mechanism Growing Exponentially

Record numbers of cases are being brought, as corporations observe each other, and hedge funds finance suits for a share of a share of the awards. The consequence? Democratic sovereignty and democracy are turning into too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede a country's own laws and the rulings enacted by parliaments is that this clause has been inserted – without democratic mandate, and frequently under an atmosphere of profound opacity – inside bilateral investment treaties.

A Real-World Case: The UK Coalmine

Twelve months ago, activists secured a significant win at the High Court. The judge ruled that schemes to excavate the first major coal mine in the UK for three decades, in Cumbria, were found to be wrongly permitted by the Conservative government, which had endorsed the bizarre claim that the mine would have no consequence on our carbon budgets. The new government later cancelled the licence the previous administration had issued. Now, this success is under threat by an secret arbitration panel reporting to no one but the entities filing the suit.

During August, a firm whose final controllers are based in the offshore financial centre lodged a claim challenging the UK government. Last week a dispute settlement body in the United States was established to adjudicate on it.

The company is litigating against the UK for the profits it would have generated if the mine had been permitted to commence operations. We have little idea how much this might be. Who is representing it challenging the state? A member of parliament, and ex-law officer in the previous government, the noted patriot the MP. The government makes a decision, the domestic court upholds it, then a foreign company contests it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

The Russian Case

Simultaneously that the tribunal on the coalmine case was convened, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. We know scarce of the case to date, but it is highly possible that he may employ the tribunal to fight the sanctions the UK imposed on him following the invasion of Ukraine. He has already filed a claim against Luxembourg on these grounds, claiming $16bn: half that nation's yearly income. Among the lawyers on his side? the wife of a former prime minister, married to the ex-UK leader.

International law scholars contend that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over elected governments might be preventing the funds Ukraine critically depends on.

Misleading Claims and Escalating Costs

We were assured that these events were not possible. In 2014, a former prime minister, advocating for the most significant and hazardous of all these agreements, stated: “Britain has agreed to investment treaty upon trade deal and we have never seen a problem in the past.” An adviser on this issue accused campaigners of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that solely developing countries needed to fear such legal actions. Predictions that “as corporations grasp the influence they now possess, they will shift their focus from the vulnerable countries to the strong ones” were greeted by widespread derision.

That warning is now a reality. This year, fossil fuel and resource corporations have lodged a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the UK mine – official measures to halt global warming. Companies have thus far won $114bn via ISDS, of which oil majors have secured eighty-four billion dollars. That represents the combined GDP