Hello, Overseas Oligarchs and Firms! Kindly Proceed and Take Legal Action Against the UK for Billions of Pounds.

What is your understand our democratic process functions? It could be similar to this. Citizens choose MPs. They legislate on bills. Should a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. Well, that’s how it operated in the past. Those days are over.

The Emergence of Shadow Courts

Nowadays, overseas companies, and the billionaires that control them, can sue nation states for the regulations they pass, at private courts made up of business advocates. Such disputes are held in secret. In contrast to domestic courts, these panels grant no avenue for appeal or legal review. Ordinary citizens cannot take a case to them, and neither can our government, or even companies operating from this country. The door is open solely for entities registered abroad.

If a tribunal finds that a law or policy may compromise the corporation’s expected profits, it may order financial penalties of vast sums, running into billions.

This compensation constitute not tangible damages but money the arbitrators decide the company could potentially have made. The government could be forced to drop the legislation. It is deterred from enacting future policies of a similar nature, due to the risk of facing litigation.

A Mechanism Growing Exponentially

Unprecedented levels of disputes are being initiated, as corporations take cues from each other, and investment funds bankroll lawsuits for a share of a share of the settlements. The result? National sovereignty and popular rule are becoming too costly.

The process is called “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the choices enacted by elected bodies is that this clause has been written – absent public approval, and typically amid conditions of total confidentiality – within bilateral investment treaties.

A Specific Example: The Whitehaven Coal Mine

Last year, a conservation group won a great victory at the High Court. The presiding officer determined that schemes to excavate the first major coal mine in the UK for three decades, in Cumbria, had been unlawfully approved by the previous government, which had accepted the extraordinary assertion that the mine would have no consequence on national carbon targets. The incoming administration subsequently revoked the licence the former government had granted. Currently, this success is under threat by an foreign court reporting to exclusively the corporations filing the suit.

Last August, a firm whose final controllers are based in the Cayman Islands initiated proceedings against the UK government. Recently a arbitration panel in the US capital was established to consider the case.

The claimant is litigating against the UK for the money it would have generated if the mine had received permission to proceed. We have no idea how much this could amount to. Who is serving as its counsel in opposition to the British government? An elected representative, and previous senior legal advisor in the previous government, the self-proclaimed patriot the MP. The administration passes a law, the national judiciary validates it, then a foreign company disputes it through an undemocratic private court, and a elected official acts on its behalf.

The Russian Challenge

Concurrently that the panel on the mining lawsuit was established, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. Details are nothing of the case to date, but it appears probable that he will utilise the arbitration process to fight the restrictions the UK imposed on him subsequent to the war in Ukraine. He has already started suing another European state on these grounds, demanding $16bn: an amount representing half state's yearly income. Among the legal team on his side? Cherie Blair, wife of the ex-UK leader.

Trade specialists contend that the EU’s hesitation in leveraging immobilised Russian assets as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over elected governments might be preventing the funds Ukraine desperately needs.

Misleading Claims and Mounting Risks

We were assured that these scenarios wouldn’t happen. In 2014, a former prime minister, advocating for the most significant and hazardous of all such treaties, stated: “Britain has agreed to investment treaty after trade deal and we have never seen a issue in the past.” An adviser on this topic described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that exclusively weaker states needed to fear ISDS claims. Cautionary notes that “as corporations grasp the influence they’ve been granted, they will shift their focus from the vulnerable countries to the developed economies” were met with widespread derision.

That prediction has come to pass. This year, energy and extraction companies have initiated a historic level of cases against nations both wealthy and developing, contesting – similar to the Whitehaven project – state efforts to stop climate breakdown. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which energy giants have been awarded the majority. That represents the combined GDP