Welcome, Foreign Oligarchs and Corporations! Please Come and Sue the UK for Vast Sums.

What is your understand our democratic process operates? It could be something like this. Citizens choose MPs. They debate and pass bills. If a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. That's it. Well, that’s how it operated in the past. Not anymore.

The Rise of Secret Courts

Today, foreign corporations, or the billionaires who own them, are able to litigate against nation states for the policies they pass, at offshore tribunals made up of commercial attorneys. These proceedings are conducted away from public scrutiny. Differing from national judiciaries, these tribunals grant no avenue for appeal or legal review. Ordinary citizens are barred from bringing a case to them, just as our government, including companies headquartered in this country. They are open only to corporations registered abroad.

Should an arbitration panel rules that a law or policy could harm the corporation’s anticipated profits, it may order damages of hundreds of millions of pounds, potentially billions.

These sums represent not tangible damages but money the panel members conclude the company would perhaps have made. The state may have to abandon its policy. It will be discouraged from introducing similar legislation in that area, for fear of incurring a lawsuit.

A System Growing Exponentially

Unprecedented levels of cases are being brought, as corporations observe each other, and hedge funds finance suits in return for a portion of the settlements. The result? Sovereignty and popular rule are turning into prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede national legislation and the decisions taken by legislatures is that this clause has been incorporated – without public consent, and often in an atmosphere of profound opacity – inside trade treaties.

A Concrete Example: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the High Court. The judge ruled that schemes to open the first major coal mine in the UK for a generation, in Cumbria, had been unlawfully approved by the Conservative government, which had agreed to the bizarre claim that the mine could have no consequence on climate commitments. The incoming administration subsequently revoked the licence the previous administration had granted. Now, this victory faces being overturned by an secret arbitration panel reporting to exclusively the corporations filing the suit.

During August, a firm whose ultimate owners are located in the tax haven lodged a claim against the UK government. The previous week a dispute settlement body in Washington DC was established to hear it.

This firm is suing the UK for the profits it could have earned if the mine had received permission to proceed. We have no idea how much this sum represents. Which individual is representing it in opposition to the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation challenges it through an unaccountable private court, and a member of our parliament works for its behalf.

The Russian Challenge

Simultaneously that the panel on the coal mine dispute was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. Details are little of the case at present, but it appears probable that he’ll use the tribunal to fight the sanctions the UK enacted against him subsequent to the Russian aggression. He has previously started suing Luxembourg with similar intent, seeking sixteen billion dollars: an amount representing half state's annual revenue. Included in the counsel representing him there? the wife of a former prime minister, wife of the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as security for its loan to Ukraine arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, undemocratic power over elected governments could be blocking the funds Ukraine desperately needs.

Misleading Claims and Growing Costs

The public was told that these events were not possible. In 2014, a former prime minister, advocating for the largest and riskiest of all these agreements, stated: “Britain has agreed to trade agreement upon trade deal and there has never been a case in the past.” A consultant on this topic labelled activists of “exaggeration … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states needed to fear these lawsuits. Warnings that “once firms grasp the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were greeted by widespread derision.

That prediction is now a reality. This year, oil and gas and resource corporations have lodged a historic level of suits against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – state efforts to stop environmental catastrophe. Companies have thus far won vast sums via ISDS, of which energy giants have been awarded the majority. That represents the combined GDP