Welcome, Overseas Tycoons and Firms! Please Come and Sue the UK for Vast Sums.

Can you reckon our system of government works? Perhaps similar to this. Citizens choose MPs. They legislate on bills. When a majority is obtained, the bills pass into law. The law is maintained by the courts. That's it. Well, that used to be how it used to work. Those days are over.

The Rise of Shadow Courts

Nowadays, foreign corporations, or the billionaires who own them, can sue nation states for the policies they pass, at private courts made up of business advocates. These proceedings are conducted away from public scrutiny. In contrast to domestic courts, these tribunals allow no avenue for appeal or legal review. The general public cannot take a case to them, nor can our government, including businesses based in this country. The door is open solely for businesses based overseas.

When a secret court rules that a legislative action could harm the corporation’s projected profits, it may order damages of hundreds of millions, potentially billions.

This compensation constitute not real financial harm but compensation the arbitrators decide the company might otherwise have made. The administration might be compelled to drop the legislation. It becomes hesitant to enacting future policies in that area, for fear of incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of disputes are being initiated, as firms take cues from each other, and investment funds bankroll lawsuits in exchange for a share of the takings. The outcome? National sovereignty and democratic governance are turning into too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede national legislation and the choices made by legislatures is that this provision has been incorporated – without public consent, and frequently under conditions of extreme secrecy – into bilateral investment treaties.

A Concrete Example: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the high court. The judge found that proposals to excavate the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the previous government, which had agreed to the extraordinary assertion that the mine would have zero effect on climate commitments. The Labour government then withdrew the permission the Tories had granted. Now, this legal outcome is under threat by an offshore tribunal answering to only the companies bringing the case.

Last August, a firm whose final controllers are located in the Cayman Islands initiated proceedings against the UK government. Recently a dispute settlement body in the United States was set up to adjudicate on it.

The company is suing the UK for the money it would have generated if the mine had received permission to go ahead. Citizens have no clear indication how much this might be. What legal team is representing it against the British government? A sitting MP, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The administration enacts a policy, the domestic court upholds it, then a foreign company challenges it through an undemocratic private court, and a elected official represents its behalf.

A Sanctions Lawsuit

On the same day that the court on the coalmine case was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case at present, but it appears probable that he will utilise the arbitration process to fight the sanctions the UK imposed on him after the Russian aggression. He has initiated proceedings against Luxembourg for this reason, demanding sixteen billion dollars: equivalent to half of state's yearly budget. Part of the lawyers on his side? the wife of a former prime minister, married to the previous PM.

Legal experts argue that the EU’s delay in leveraging immobilised Russian assets as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over elected governments may be obstructing the money Ukraine critically depends on.

Misleading Claims and Escalating Costs

We were assured that such things were not possible. Previously, a senior politician, championing the most significant and hazardous of all such treaties, stated: “Britain has agreed to trade deal after trade deal and there has never been a issue in the past.” A consultant on this issue described critics of “scaremongering … in reality, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “when companies begin to understand the influence they now possess, they will redirect their efforts from the vulnerable countries to the developed economies” were met with general mockery.

That prediction has now materialised. This year, fossil fuel and extraction companies have lodged a unprecedented number of suits against nations both wealthy and developing, contesting – like the example of the UK mine – official measures to prevent global warming. Companies have thus far won vast sums by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That equates to the combined GDP