Welcome, Overseas Magnates and Companies! Kindly Proceed and Sue the UK for Vast Sums.

What is your understand our system of government operates? Maybe along the lines of this. Citizens choose MPs. They legislate on bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. End of story. However, that was how it operated in the past. No longer.

The Advent of Offshore Tribunals

In the modern era, overseas companies, and the billionaires that control them, are able to litigate against elected administrations for the laws they pass, at offshore tribunals composed of business advocates. Such disputes take place behind closed doors. In contrast to domestic courts, these tribunals allow no avenue for appeal or legal review. You or I are unable to file a case to them, just as our government, or even enterprises operating from this country. Access is granted only to corporations operating from foreign soil.

When a secret court rules that a government measure may compromise the corporation’s projected profits, it may order financial penalties of hundreds of millions, potentially billions.

These awards represent not actual losses but money the panel members conclude the company could potentially have made. The government could be forced to drop the legislation. It is hesitant to passing future laws in that area, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of disputes are being filed, as companies learn from each other, and private equity bankroll lawsuits for a share of a portion of the takings. The outcome? National sovereignty and democratic governance are turning into unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the decisions made by legislatures is that this clause has been incorporated – absent public approval, and frequently under an atmosphere of total confidentiality – into bilateral investment treaties.

A Specific Instance: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the High Court. The judge determined that proposals to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had accepted the questionable argument that the mine could have no impact on national carbon targets. The new government subsequently revoked the permission the former government had granted. Currently, this success could be compromised by an secret arbitration panel answering to exclusively the companies petitioning it.

In August, a company whose ultimate owners reside in the offshore financial centre initiated proceedings versus the UK government. Last week a tribunal in Washington DC was established to adjudicate on it.

This firm is litigating against the UK for the revenue it would have generated if the mine had received permission to go ahead. Citizens have no clear indication how much this might be. Who is serving as its counsel challenging the British government? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government passes a law, the domestic court validates it, then a foreign company contests it through an secretive private court, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the coalmine case was convened, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case so far, but it is highly possible that he will utilise the arbitration process to challenge the sanctions the UK levied against him after the Russian aggression. He has already started suing Luxembourg with similar intent, claiming $16bn: equivalent to half of state's annual revenue. Part of the counsel acting for him in that case? Cherie Blair, spouse of the previous PM.

International law scholars contend that the EU’s hesitation in leveraging immobilised state funds as collateral for its financial support package stems from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This unprecedented, undemocratic power over sovereign states may be obstructing the money Ukraine critically depends on.

Misleading Claims and Escalating Threats

We were assured that these events wouldn’t happen. Previously, a former prime minister, promoting the most significant and hazardous of all investment pacts, told us: “Britain has agreed to trade deal upon trade deal and we have never seen a case in the past.” An expert on this issue accused critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that solely developing countries had to worry about such legal actions. Warnings that “as corporations grasp the power bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were met with widespread derision.

That warning has now materialised. Recently, fossil fuel and mining firms have initiated a record number of suits against nations rich and poor, contesting – like the example of the Whitehaven project – official measures to stop global warming. Firms have thus far won $114bn by using ISDS, of which energy giants have secured eighty-four billion dollars. That represents the combined GDP