Greetings, Overseas Tycoons and Companies! Please Come and Take Legal Action Against the UK for Vast Sums.

How do you reckon our democratic process operates? It could be something like this. The public votes for MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. Statutes is upheld by the courts. End of story. Well, that used to be how it once functioned. No longer.

The Advent of Secret Tribunals

In the modern era, foreign corporations, along with the billionaires behind them, can sue governments for the policies they pass, at private courts made up of commercial attorneys. Such disputes take place in secret. Differing from national judiciaries, these tribunals allow no opportunity to appeal or oversight by judges. You or I are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. Access is granted exclusively to corporations based overseas.

Should an arbitration panel finds that a legislative action may compromise the corporation’s projected profits, it may order financial penalties of vast sums, potentially billions.

This compensation constitute not tangible damages but funds the arbitrators decide the company would perhaps have made. The state could be forced to abandon its policy. It becomes discouraged from passing future laws of a similar nature, due to the risk of being sued.

A Process Growing Exponentially

Record numbers of disputes are being filed, as firms take cues from each other, and investment funds finance suits in exchange for a share of the settlements. The result? National sovereignty and popular rule are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the rulings taken by legislatures is that this stipulation has been inserted – without public consent, and frequently under conditions of profound opacity – within trade treaties.

A Concrete Case: The UK Coal Mine

Last year, activists won a great victory at the High Court. The presiding officer found that schemes to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine would have had zero effect on national carbon targets. The incoming administration later cancelled the consent the previous administration had issued. Now, this success could be compromised by an secret arbitration panel answering to no one but the corporations petitioning it.

In August, a company whose beneficial owners are located in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the United States was convened to hear it.

The company is seeking compensation from the UK for the profits it might have made if the mine had received permission to commence operations. We have no idea how much this might be. What legal team is serving as its counsel against the UK administration? An elected representative, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The administration passes a law, the national judiciary upholds it, then a foreign company challenges it through an undemocratic private court, and a member of our parliament works for its behalf.

The Russian Case

Concurrently that the panel on the coalmine case was established, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. We know scarce of the case to date, but it appears probable that he may employ the tribunal to fight the restrictions the UK enacted against him after the invasion of Ukraine. He has previously filed a claim against another European state for this reason, seeking $16bn: an amount representing half nation's yearly income. Among the legal team on his side? a prominent lawyer, married to the ex-UK leader.

International law scholars believe that the EU’s delay in leveraging immobilised Russian assets as collateral for its financial support package is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over democratic administrations may be obstructing the finance Ukraine critically depends on.

False Assurances and Escalating Risks

The public was told that such things wouldn’t happen. In 2014, a former prime minister, advocating for the biggest and most dangerous of all such treaties, told us: “The UK has signed trade agreement upon trade deal and there has never been a case in the past.” An adviser on this matter labelled campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries should be concerned by such legal actions. Predictions that “once firms start to realise the power bestowed upon them, they will shift their focus from the poorer states to the strong ones” were dismissed with scepticism.

That prediction is now a reality. In the current period, fossil fuel and extraction companies have filed a unprecedented number of suits against nations across the economic spectrum, challenging – similar to the Whitehaven project – state efforts to halt climate breakdown. Corporations have thus far won $114bn by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That represents the combined GDP