Welcome, International Oligarchs and Corporations! Kindly Proceed and Sue the UK for Vast Sums.

How do you reckon our political system operates? Maybe something like this. We elect MPs. They debate and pass bills. Should a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. End of story. However, that used to be how it once functioned. Not anymore.

The Advent of Offshore Tribunals

Nowadays, international firms, or the oligarchs who own them, have the power to sue elected administrations for the policies they pass, at private courts staffed by commercial attorneys. The cases are conducted in secret. In contrast to domestic courts, these panels grant no right of appeal or judicial review. You or I are unable to file a case to them, nor can our government, including businesses based in this country. Access is granted solely for entities based overseas.

Should an arbitration panel rules that a legislative action could harm the corporation’s projected profits, it may order compensation of hundreds of millions, potentially billions.

These awards constitute not tangible damages but money the tribunal officials conclude the company would perhaps have made. The government could be forced to drop the legislation. It will be hesitant to passing future laws in that area, for fear of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being brought, as firms take cues from each other, and hedge funds finance suits for a share of a share of the awards. The outcome? National sovereignty and popular rule are becoming too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the choices made by elected bodies is that this provision has been inserted – without democratic mandate, and typically amid an atmosphere of profound opacity – inside trade treaties.

A Real-World Instance: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the High Court. The justice found that plans to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had agreed to the questionable argument that the mine would have had zero effect on national carbon targets. The Labour government then withdrew the permission the Tories had approved. Now, this success is under threat by an offshore tribunal answering to no one but the corporations filing the suit.

In August, a company whose final controllers reside in the Cayman Islands initiated proceedings versus the UK government. Last week a arbitration panel in the US capital was set up to hear it.

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to go ahead. The public has little idea how much this sum represents. Which individual is representing it in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The administration makes a decision, the high court upholds it, then a international entity contests it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Case

Simultaneously that the panel on the coal mine dispute was established, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. We know little of the case so far, but it seems likely that he may employ the tribunal to fight the restrictions the UK levied against him after the war in Ukraine. He has previously initiated proceedings against a small nation with similar intent, seeking a colossal sum: half that nation's yearly budget. Included in the lawyers acting for him in that case? a prominent lawyer, spouse of the former British prime minister.

Legal experts contend that the EU’s delay in utilising seized Russian assets as security for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over democratic administrations might be preventing the finance Ukraine urgently requires.

False Assurances and Escalating Costs

We were assured that these scenarios wouldn’t happen. Years ago, a government leader, championing the most significant and hazardous of all these agreements, declared: “We’ve signed investment treaty after trade deal and we have never seen a case in the past.” An expert on this topic accused campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The overall message appeared to be that solely developing countries needed to fear these lawsuits. Predictions that “when companies grasp the power they now possess, they will turn their attention from the weak nations to the developed economies” were dismissed with scepticism.

That prediction is now a reality. In the current period, fossil fuel and mining firms have lodged a unprecedented number of cases against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – state efforts to halt global warming. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have been awarded $84bn. That equates to the combined GDP