Hello, International Tycoons and Corporations! Kindly Come and Litigate Against the UK for Billions of Pounds.

What is your understand our democratic process works? Perhaps along the lines of this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills become law. Legislation are enforced by the courts. End of story. However, that was how it operated in the past. Those days are over.

The Rise of Secret Tribunals

Today, international firms, along with the oligarchs that control them, can sue governments for the policies they pass, at private courts made up of corporate lawyers. These proceedings are conducted in secret. Differing from national judiciaries, these bodies grant no right of appeal or legal review. You or I cannot take a case to them, just as our government, including companies headquartered in this country. Access is granted exclusively to businesses registered abroad.

If a tribunal rules that a legislative action could harm the corporation’s projected profits, it may order financial penalties of hundreds of millions of pounds, even billions.

These awards represent not tangible damages but funds the panel members determine the company might otherwise have made. The administration may have to rescind the measure. It becomes deterred from enacting future policies in that area, worried about incurring a lawsuit.

A Mechanism Growing Exponentially

Historically high figures of cases are being filed, as firms observe each other, and private equity fund legal actions for a share of a cut of the settlements. The result? Sovereignty and democratic governance are turning into too costly.

The process is called “investor-state dispute settlement” (ISDS). The rationale it can supersede a country's own laws and the decisions enacted by elected bodies is that this stipulation has been inserted – without public consent, and often in conditions of total confidentiality – inside international trade agreements.

A Specific Instance: The UK Coalmine

Twelve months ago, a conservation group secured a significant win at the senior court. The judge found that schemes to dig the first new deep coal mine in the UK for 30 years, in northwest England, were illegally sanctioned by the previous government, which had accepted the questionable argument that the mine would have zero effect on our carbon budgets. The incoming administration later cancelled the licence the former government had issued. Currently, this victory could be compromised by an foreign court reporting to exclusively the entities petitioning it.

During August, a company whose beneficial owners are located in the Cayman Islands lodged a claim versus the UK government. The previous week a tribunal in the United States was set up to adjudicate on it.

The company is suing the UK for the money it would have generated if the mine had been permitted to go ahead. The public has little idea how much this might be. What legal team is acting on its behalf against the UK administration? A member of parliament, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The state makes a decision, the domestic court upholds it, then a international entity challenges it through an undemocratic offshore tribunal, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coal mine dispute was established, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know scarce of the case at present, but it appears probable that he will utilise the ISDS mechanism to contest the restrictions the UK imposed on him following the Russian aggression. He has filed a claim against Luxembourg with similar intent, claiming a colossal sum: half that government’s yearly budget. Among the counsel on his side? the wife of a former prime minister, married to the ex-UK leader.

International law scholars believe that the EU’s delay in utilising seized oligarchs' funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over elected governments might be preventing the funds Ukraine critically depends on.

Empty Promises and Escalating Risks

Politicians promised that such things could not occur. In 2014, a senior politician, promoting the biggest and most dangerous of all investment pacts, declared: “Britain has agreed to investment treaty after trade deal and there has never been a case in the past.” An adviser on this matter described campaigners of “alarmism … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states had to worry about these lawsuits. Warnings that “once firms grasp the power they now possess, they will redirect their efforts from the poorer states to the developed economies” were met with scepticism.

That threat has come to pass. Recently, energy and resource corporations have filed a historic level of cases against nations across the economic spectrum, challenging – like the example of the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Corporations have so far won vast sums by using ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP