Greetings, International Oligarchs and Companies! Please Come and Take Legal Action Against the UK for Vast Sums.

What is your reckon our democratic process functions? Maybe along the lines of this. Citizens choose MPs. They legislate on bills. When a majority is obtained, the bills pass into law. Statutes is maintained by the courts. End of story. However, that used to be how it once functioned. No longer.

The Emergence of Secret Arbitration Panels

In the modern era, international firms, and the billionaires that control them, have the power to sue nation states for the regulations they pass, at secret arbitration panels staffed by business advocates. These proceedings are conducted away from public scrutiny. Unlike our courts, these bodies allow no right of appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, including companies operating from this country. They are open solely for corporations based overseas.

When a secret court rules that a law or policy could harm the corporation’s projected profits, it may order compensation of hundreds of millions of pounds, potentially billions.

These sums are based not on real financial harm but money the panel members determine the company would perhaps have made. The government could be forced to rescind the measure. It will be hesitant to introducing similar legislation along the same lines, for fear of incurring a lawsuit.

A System Running Rampant

Record numbers of disputes are being initiated, as firms learn from each other, and investment funds finance suits in return for a portion of the awards. The consequence? Democratic sovereignty and popular rule are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the rulings taken by elected bodies is that this clause has been incorporated – absent public approval, and often in an atmosphere of profound opacity – into international trade agreements.

A Specific Example: The UK Coalmine

Last year, environmental campaigners won a great victory at the high court. The presiding officer ruled that plans to excavate the first major coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the previous government, which had agreed to the questionable argument that the mine would have zero effect on national carbon targets. The incoming administration then withdrew the licence the previous administration had approved. Currently, this victory faces being overturned by an secret arbitration panel reporting to only the corporations bringing the case.

In August, a company whose final controllers are based in the Cayman Islands lodged a claim against the UK government. Last week a arbitration panel in Washington DC was established to hear it.

The claimant is litigating against the UK for the money it would have generated if the mine had received permission to go ahead. Citizens have no idea how much this might be. Which individual is acting on its behalf in opposition to the British government? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot the MP. The state passes a law, the domestic court upholds it, then a international entity disputes it through an undemocratic offshore tribunal, and a elected official works for its behalf.

A Sanctions Lawsuit

On the same day that the court on the coalmine case was established, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case to date, but it seems likely that he may employ the tribunal to contest the penalties the UK enacted against him subsequent to the war in Ukraine. He has already initiated proceedings against a small nation on these grounds, demanding a colossal sum: half that nation's yearly income. Part of the counsel acting for him in that case? the wife of a former prime minister, married to the previous PM.

International law scholars argue that the EU’s delay in utilising seized oligarchs' funds as guarantee for its aid for Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments may be obstructing the money Ukraine urgently requires.

False Assurances and Growing Risks

Politicians promised that these scenarios could not occur. Years ago, a senior politician, promoting the biggest and most dangerous of all such treaties, told us: “The UK has signed investment treaty upon trade deal and there has not been a case in the past.” An expert on this issue described activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations needed to fear these lawsuits. Warnings that “once firms grasp the influence bestowed upon them, they will shift their focus from the poorer states to the wealthy nations” were dismissed with scepticism.

That warning has come to pass. Recently, energy and resource corporations have initiated a historic level of claims against nations across the economic spectrum, challenging – as in the case of the Whitehaven project – government attempts to prevent global warming. Firms have thus far won vast sums by using ISDS, of which energy giants have been awarded $84bn. That represents the combined GDP