Greetings, Overseas Magnates and Corporations! Kindly Proceed and Take Legal Action Against the UK for Billions of Pounds.

What is your perceive our political system functions? It could be along the lines of this. The public votes for MPs. They vote on bills. Should a majority is achieved, the bills become law. The law is maintained by the courts. That's it. However, that’s how it once functioned. Those days are over.

The Rise of Offshore Tribunals

Today, international firms, along with the oligarchs behind them, have the power to sue governments for the regulations they pass, at secret arbitration panels composed of business advocates. These proceedings are held away from public scrutiny. Differing from national judiciaries, these tribunals allow no right of appeal or legal review. You or I are barred from bringing a case to them, and neither can our government, or even companies operating from this country. Access is granted solely for businesses based overseas.

When a secret court determines that a legislative action might diminish the corporation’s expected profits, it may order damages of hundreds of millions, even billions.

This compensation are based not on tangible damages but funds the tribunal officials conclude the company could potentially have made. The state could be forced to drop the legislation. It becomes hesitant to introducing similar legislation of a similar nature, worried about being sued.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being filed, as firms take cues from each other, and private equity fund legal actions in return for a cut of the awards. The outcome? Sovereignty and democracy are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to override national legislation and the choices made by parliaments is that this provision has been incorporated – without public consent, and frequently under conditions of total confidentiality – into international trade agreements.

A Real-World Example: The Cumbrian Coalmine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer ruled that proposals to excavate the first new deep coal mine in the UK for a generation, in northwest England, were unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine would have had zero effect on climate commitments. The incoming administration subsequently revoked the consent the Tories had granted. Now, this victory faces being overturned by an secret arbitration panel accountable to exclusively the corporations filing the suit.

In August, a company whose beneficial owners reside in the offshore financial centre filed a lawsuit versus the UK government. Recently a arbitration panel in the US capital was set up to consider the case.

This firm is seeking compensation from the UK for the money it could have earned if the mine had received permission to proceed. The public has no idea how much this might be. What legal team is representing it challenging the British government? A sitting MP, and former attorney-general in the previous government, that great patriot the MP. The government enacts a policy, the high court validates it, then a foreign company disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

A Sanctions Case

On the same day that the court on the coal mine dispute was established, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. We know nothing of the case at present, but it appears probable that he’ll use the ISDS mechanism to challenge the sanctions the UK imposed on him subsequent to the war in Ukraine. He has started suing another European state on these grounds, seeking sixteen billion dollars: half that nation's yearly budget. Part of the lawyers acting for him in that case? Cherie Blair, married to the former British prime minister.

Trade specialists contend that the EU’s hesitation in utilising seized state funds as security for its loan to Ukraine stems from apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a investment pact. This unprecedented, secretive influence over elected governments might be preventing the money Ukraine urgently requires.

Empty Promises and Growing Costs

The public was told that these events could not occur. Years ago, a government leader, championing the largest and riskiest of all such treaties, declared: “The UK has signed investment treaty after trade deal and there has not been a problem in the past.” An expert on this issue labelled activists of “scaremongering … the truth is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that solely developing countries should be concerned by such legal actions. Cautionary notes that “once firms begin to understand the power they now possess, they will shift their focus from the weak nations to the strong ones” were met with widespread derision.

That warning has now materialised. In the current period, fossil fuel and extraction companies have filed a record number of suits against nations rich and poor, contesting – like the example of the Cumbrian coalmine – official measures to stop global warming. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP