Hello, Foreign Magnates and Firms! Please Proceed and Litigate Against the UK for Billions of Pounds.

Can you perceive our democratic process works? Maybe similar to this. The public votes for MPs. They vote on bills. When a majority is secured, the bills are enacted as law. The law are enforced by the courts. Simple as that. However, that was how it operated in the past. Not anymore.

The Advent of Secret Courts

Today, international firms, or the oligarchs behind them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are conducted in secret. Unlike our courts, these panels allow no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even businesses headquartered in this country. Access is granted solely for entities registered abroad.

Should an arbitration panel finds that a government measure could harm the corporation’s anticipated profits, it may order damages of hundreds of millions of pounds, running into billions.

This compensation are based not on tangible damages but compensation the panel members conclude the company might otherwise have made. The state may have to drop the legislation. It will be discouraged from enacting future policies along the same lines, worried about being sued.

A Mechanism Running Rampant

Unprecedented levels of cases are being filed, as corporations observe each other, and private equity finance suits in return for a portion of the awards. The outcome? National sovereignty and democracy are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it can supersede domestic law and the choices enacted by elected bodies is that this provision has been incorporated – without public consent, and typically amid an atmosphere of profound opacity – into trade treaties.

A Specific Example: The Cumbrian Coal Mine

A year ago, environmental campaigners achieved a major legal triumph at the high court. The justice found that plans to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had accepted the bizarre claim that the mine would have had no impact on our carbon budgets. The incoming administration subsequently revoked the consent the former government had approved. Today, this success could be compromised by an foreign court reporting to no one but the companies bringing the case.

During August, a firm whose beneficial owners are located in the Cayman Islands filed a lawsuit against the UK government. The previous week a dispute settlement body in the United States was established to consider the case.

This firm is litigating against the UK for the money it could have earned if the mine had been permitted to commence operations. Citizens have no idea how much this sum represents. Who is serving as its counsel challenging the British government? An elected representative, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The state passes a law, the high court upholds it, then a overseas corporation disputes it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the court on the coalmine case was established, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case at present, but it is highly possible that he will utilise the tribunal to contest the restrictions the UK imposed on him after the war in Ukraine. He has previously initiated proceedings against another European state on these grounds, demanding a colossal sum: half that nation's yearly budget. Among the legal team on his side? Cherie Blair, married to the former British prime minister.

Legal experts contend that the EU’s delay in utilising seized state funds as guarantee for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states could be blocking the funds Ukraine critically depends on.

False Assurances and Escalating Costs

The public was told that these events were not possible. Years ago, a senior politician, promoting the most significant and hazardous of all investment pacts, told us: “We’ve signed trade agreement upon trade deal and we have never seen a issue in the past.” An adviser on this issue described critics of “exaggeration … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries needed to fear such legal actions. Predictions that “once firms grasp the power they’ve been granted, they will turn their attention from the weak nations to the strong ones” were dismissed with widespread derision.

That threat has now materialised. In the current period, oil and gas and mining firms have initiated a unprecedented number of suits against nations across the economic spectrum, opposing – like the example of the Whitehaven project – state efforts to prevent global warming. Companies have so far won $114bn via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP