Hello, International Magnates and Companies! Please Proceed and Sue the UK for Vast Sums.

What is your perceive our democratic process operates? It could be something like this. The public votes for MPs. They debate and pass bills. Should a majority is achieved, the bills pass into law. Legislation are enforced by the courts. That's it. However, that used to be how it used to work. No longer.

The Rise of Secret Courts

Today, international firms, or the billionaires that control them, are able to litigate against elected administrations for the policies they pass, at offshore tribunals staffed by business advocates. The cases are held away from public scrutiny. Differing from national judiciaries, these bodies allow no opportunity to appeal or legal review. The general public cannot take a case to them, nor can our government, or even companies headquartered in this country. The door is open solely for corporations based overseas.

Should an arbitration panel determines that a legislative action could harm the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, potentially billions.

This compensation constitute not tangible damages but money the arbitrators decide the company could potentially have made. The administration could be forced to rescind the measure. It will be hesitant to passing future laws of a similar nature, due to the risk of being sued.

A Mechanism Running Rampant

Record numbers of disputes are being brought, as firms learn from each other, and hedge funds bankroll lawsuits for a share of a cut of the awards. The consequence? Democratic sovereignty and democratic governance are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede a country's own laws and the choices made by legislatures is that this stipulation has been incorporated – without public consent, and frequently under an atmosphere of total confidentiality – within international trade agreements.

A Real-World Instance: The UK Coalmine

A year ago, a conservation group achieved a major legal triumph at the high court. The presiding officer ruled that plans to dig the first deep coalmine in the UK for a generation, in northwest England, had been unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine could have no impact on climate commitments. The new government later cancelled the permission the previous administration had granted. Today, this legal outcome could be compromised by an foreign court answering to exclusively the entities filing the suit.

In August, a company whose beneficial owners are located in the tax haven filed a lawsuit challenging the UK government. Recently a tribunal in Washington DC was set up to hear it.

The claimant is suing the UK for the profits it might have made if the mine had been permitted to proceed. The public has no idea how much this sum represents. What legal team is representing it against the British government? An elected representative, and ex-law officer in the previous government, that great patriot Geoffrey Cox. The state enacts a policy, the high court validates it, then a foreign company disputes it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

The Russian Lawsuit

Concurrently that the panel on the mining lawsuit was established, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are nothing of the case at present, but it seems likely that he’ll use the ISDS mechanism to contest the restrictions the UK imposed on him after the war in Ukraine. He has initiated proceedings against a small nation on these grounds, seeking a colossal sum: an amount representing half nation's yearly budget. Among the legal team on his side? Cherie Blair, wife of the previous PM.

Legal experts believe that the EU’s procrastination in utilising seized Russian assets as security for its loan to Ukraine is due to apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations may be obstructing the finance Ukraine desperately needs.

Misleading Claims and Mounting Threats

The public was told that these events could not occur. Previously, a former prime minister, championing the largest and riskiest of all these agreements, told us: “The UK has signed investment treaty after trade deal and there has never been a case in the past.” An adviser on this matter described campaigners of “alarmism … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear these lawsuits. Cautionary notes that “as corporations grasp the authority they now possess, they will redirect their efforts from the weak nations to the strong ones” were greeted by scepticism.

That threat is now a reality. Recently, fossil fuel and resource corporations have initiated a unprecedented number of suits against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – state efforts to stop climate breakdown. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have secured eighty-four billion dollars. That is equivalent to the combined GDP