Hello, International Magnates and Corporations! Please Come and Sue the UK for Billions of Pounds.

How do you perceive our democratic process functions? Perhaps something like this. We elect MPs. They debate and pass bills. If a majority is secured, the bills pass into law. The law are enforced by the courts. That's it. However, that used to be how it once functioned. No longer.

The Rise of Offshore Tribunals

In the modern era, foreign corporations, along with the billionaires who own them, are able to litigate against nation states for the policies they pass, at private courts made up of business advocates. Such disputes take place behind closed doors. In contrast to domestic courts, these bodies provide no avenue for appeal or judicial review. You or I are unable to file a case to them, and neither can our government, or even businesses based in this country. Access is granted exclusively to businesses based overseas.

When a secret court finds that a legislative action may compromise the corporation’s projected profits, it may order financial penalties of hundreds of millions of pounds, even billions.

These sums represent not real financial harm but money the panel members determine the company would perhaps have made. The government could be forced to abandon its policy. It becomes deterred from introducing similar legislation in that area, for fear of facing litigation.

A Mechanism Growing Exponentially

Unprecedented levels of cases are being brought, as corporations take cues from each other, and investment funds finance suits in exchange for a cut of the takings. The result? Sovereignty and democratic governance are turning into too costly.

The process is called “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the rulings made by legislatures is that this provision has been inserted – without public consent, and often in an atmosphere of extreme secrecy – into international trade agreements.

A Real-World Example: The Cumbrian Coalmine

A year ago, a conservation group achieved a major legal triumph at the high court. The presiding officer ruled that proposals to excavate the first deep coalmine in the UK for 30 years, in northwest England, had been wrongly permitted by the outgoing administration, which had endorsed the questionable argument that the mine would have had no consequence on climate commitments. The Labour government subsequently revoked the licence the previous administration had approved. Currently, this success is under threat by an offshore tribunal accountable to only the companies petitioning it.

Last August, a company whose final controllers are based in the offshore financial centre initiated proceedings versus the UK government. Recently a arbitration panel in the US capital was convened to consider the case.

The company is litigating against the UK for the profits it would have generated if the mine had been allowed to proceed. Citizens have no idea how much this sum represents. Who is representing it against the state? A sitting MP, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a international entity contests it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

A Sanctions Case

On the same day that the court on the mining lawsuit was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case at present, but it seems likely that he’ll use the ISDS mechanism to contest the penalties the UK enacted against him following the invasion of Ukraine. He has initiated proceedings against a small nation with similar intent, seeking sixteen billion dollars: equivalent to half of state's yearly budget. Part of the counsel acting for him in that case? a prominent lawyer, married to the previous PM.

International law scholars argue that the EU’s delay in utilising seized oligarchs' funds as security for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, secretive influence over sovereign states could be blocking the finance Ukraine urgently requires.

Empty Promises and Mounting Costs

The public was told that these events wouldn’t happen. Previously, a former prime minister, advocating for the most significant and hazardous of all these agreements, stated: “The UK has signed trade deal after trade deal and there has never been a issue in the past.” An adviser on this matter accused activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by these lawsuits. Warnings 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 dismissed with general mockery.

That threat has now materialised. Recently, fossil fuel and extraction companies have filed a historic level of claims against nations across the economic spectrum, contesting – as in the case of the UK mine – state efforts to stop global warming. Corporations have so far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have been awarded $84bn. That equates to the combined GDP