Greetings, Foreign Oligarchs and Corporations! Kindly Come and Litigate Against the UK for Billions of Pounds.

Can you perceive our democratic process operates? Maybe along the lines of this. We elect MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. The law are enforced by the courts. Simple as that. However, that used to be how it operated in the past. Not anymore.

The Advent of Secret Arbitration Panels

Today, international firms, along with the billionaires who own them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals staffed by business advocates. These proceedings take place in secret. In contrast to domestic courts, these bodies allow no right of appeal or oversight by judges. The general public cannot take a case to them, nor can our government, or even businesses based in this country. Access is granted only to businesses registered abroad.

If a tribunal rules that a law or policy may compromise the corporation’s projected profits, it may order financial penalties of vast sums, even billions.

These sums constitute not real financial harm but compensation the arbitrators conclude the company might otherwise have made. The state could be forced to rescind the measure. It is hesitant to enacting future policies of a similar nature, for fear of incurring a lawsuit.

A Process Running Rampant

Unprecedented levels of disputes are being filed, as corporations observe each other, and private equity fund legal actions in exchange for a portion of the takings. The consequence? National sovereignty and democratic governance are becoming prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can trump national legislation and the choices enacted by parliaments is that this provision has been written – without public consent, and often in conditions of profound opacity – within bilateral investment treaties.

A Real-World Instance: The UK Coalmine

A year ago, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer determined that proposals to excavate the first deep coalmine in the UK for a generation, in northwest England, had been wrongly permitted by the Conservative government, which had endorsed the questionable argument that the mine would have zero effect on national carbon targets. The Labour government subsequently revoked the consent the previous administration had granted. Now, this legal outcome could be compromised by an foreign court accountable to exclusively the companies bringing the case.

Last August, a firm whose ultimate owners are based in the offshore financial centre filed a lawsuit versus the UK government. Recently a arbitration panel in the United States was set up to adjudicate on it.

The claimant is suing the UK for the revenue it could have earned if the mine had received permission to commence operations. The public has little idea how much this might be. Who is representing it in opposition to the British government? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The government passes a law, the domestic court validates it, then a international entity challenges it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Case

On the same day that the tribunal on the mining lawsuit was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case at present, but it appears probable that he’ll use the ISDS mechanism to contest the sanctions the UK enacted against him following the invasion of Ukraine. He has initiated proceedings against Luxembourg for this reason, seeking a colossal sum: half that government’s yearly budget. Among the lawyers on his side? a prominent lawyer, wife of the previous PM.

Legal experts contend that the EU’s hesitation in leveraging immobilised Russian assets as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over elected governments might be preventing the finance Ukraine critically depends on.

Misleading Claims and Growing Risks

We were assured that these events were not possible. Previously, a former prime minister, championing the biggest and most dangerous of all these agreements, told us: “The UK has signed trade agreement after trade deal and there has not been a case in the past.” An expert on this issue labelled critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries needed to fear ISDS claims. Predictions that “once firms begin to understand the authority bestowed upon them, they will turn their attention from the weak nations to the wealthy nations” were met with scepticism.

That prediction is now a reality. Recently, fossil fuel and resource corporations have filed a record number of claims against nations rich and poor, challenging – like the example of the Whitehaven project – state efforts to prevent environmental catastrophe. Firms have thus far won $114bn via ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP