Greetings, Overseas Oligarchs and Corporations! Please Come and Take Legal Action Against the UK for Billions.

How do you understand our system of government works? Maybe along the lines of this. The public votes for MPs. They vote on bills. If a majority is achieved, the bills pass into law. Statutes is upheld by the courts. End of story. Yet, that was how it operated in the past. Not anymore.

The Emergence of Offshore Courts

Today, overseas companies, and the oligarchs behind them, have the power to sue nation states for the regulations they pass, at private courts made up of corporate lawyers. Such disputes are held in secret. In contrast to domestic courts, these bodies grant no avenue for appeal or legal review. Ordinary citizens are unable to file a case to them, just as our government, including companies operating from this country. The door is open exclusively to businesses operating from foreign soil.

When a secret court determines that a government measure could harm the corporation’s projected profits, it can award damages of hundreds of millions, even billions.

These sums constitute not tangible damages but compensation the panel members decide the company would perhaps have made. The state could be forced to drop the legislation. It will be discouraged from enacting future policies of a similar nature, for fear of being sued.

A Process Growing Exponentially

Unprecedented levels of disputes are being filed, as corporations learn from each other, and investment funds finance suits in exchange for a share of the settlements. The consequence? National sovereignty and democratic governance are now unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede a country's own laws and the rulings made by elected bodies is that this provision has been written – absent public approval, and often in conditions of profound opacity – into trade treaties.

A Real-World Case: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The judge ruled that proposals to open the first new deep coal mine in the UK for three decades, in northwest England, had been unlawfully approved by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The incoming administration later cancelled the licence the Tories had issued. Now, this success could be compromised by an offshore tribunal answering to only the companies petitioning it.

During August, a corporate entity whose final controllers are based in the Cayman Islands filed a lawsuit challenging the UK government. Last week a arbitration panel in the United States was established to consider the case.

This firm is suing the UK for the money it might have made if the mine had been permitted to commence operations. We have no idea how much this sum represents. What legal team is representing it in opposition to the state? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot Sir Geoffrey Cox. The government makes a decision, the high court upholds it, then a overseas corporation contests it through an undemocratic private court, and a elected official represents its behalf.

A Sanctions Challenge

On the same day that the court on the mining lawsuit was established, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. Details are scarce of the case to date, but it seems likely that he will utilise the tribunal to fight the penalties the UK imposed on him after the Russian aggression. He has filed a claim against Luxembourg for this reason, claiming $16bn: an amount representing half nation's yearly budget. Among the legal team on his side? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists argue that the EU’s delay in leveraging immobilised Russian assets as security for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations may be obstructing the funds Ukraine urgently requires.

Misleading Claims and Escalating Risks

Politicians promised 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 agreement upon trade deal and there has not been a case in the past.” An expert on this topic described activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about ISDS claims. Cautionary notes that “once firms start to realise the influence they’ve been granted, they will shift their focus from the weak nations to the developed economies” were greeted by scepticism.

That warning has come to pass. This year, fossil fuel and resource corporations have filed a historic level of claims against nations both wealthy and developing, contesting – similar to the UK mine – state efforts to prevent global warming. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded $84bn. That is equivalent to the combined GDP