Welcome, Foreign Magnates and Corporations! Kindly Come and Take Legal Action Against the UK for Billions.

How do you reckon our democratic process operates? Perhaps along the lines of this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. That's it. Yet, that was how it used to work. Those days are over.

The Advent of Offshore Tribunals

Nowadays, international firms, along with the billionaires who own them, have the power to sue elected administrations for the policies they pass, at offshore tribunals made up of business advocates. These proceedings are held behind closed doors. Unlike our courts, these panels allow no avenue for appeal or judicial review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even businesses based in this country. Access is granted solely for entities registered abroad.

If a tribunal rules that a legislative action may compromise the corporation’s expected profits, it can award damages of hundreds of millions of pounds, potentially billions.

These awards are based not on real financial harm but funds the panel members decide the company would perhaps have made. The state could be forced to abandon its policy. It will be discouraged from passing future laws of a similar nature, due to the risk of facing litigation.

A Process Spiralling Out of Control

Record numbers of cases are being filed, as corporations take cues from each other, and private equity finance suits for a share of a portion of the takings. The result? Democratic sovereignty and popular rule are becoming prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can trump domestic law and the choices made by elected bodies is that this clause has been inserted – absent public approval, and frequently under a climate of extreme secrecy – into trade treaties.

A Specific Case: The Whitehaven Coalmine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The judge found that proposals to dig the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the extraordinary assertion that the mine could have no impact on climate commitments. The Labour government then withdrew the licence the previous administration had granted. Now, this success is under threat by an secret arbitration panel accountable to only the entities filing the suit.

Last August, a company whose beneficial owners are based in the offshore financial centre lodged a claim versus the UK government. The previous week a dispute settlement body in the United States was set up to adjudicate on it.

This firm is seeking compensation from the UK for the money it would have generated if the mine had received permission to commence operations. The public has no clear indication how much this could amount to. What legal team is serving as its counsel against the British government? An elected representative, and former attorney-general in the outgoing administration, the self-proclaimed patriot the MP. The state passes a law, the high court supports it, then a international entity challenges it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Case

On the same day that the court on the coalmine case was appointed, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. Details are nothing of the case so far, but it seems likely that he will utilise the tribunal to contest the sanctions the UK enacted against him following the Russian aggression. He has previously filed a claim against another European state with similar intent, claiming sixteen billion dollars: equivalent to half of government’s yearly income. Part of the legal team representing him there? Cherie Blair, wife of the previous PM.

Legal experts argue that the EU’s procrastination in utilising seized state funds as security for its aid for Ukraine arises from apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, unaccountable authority over sovereign states might be preventing the funds Ukraine desperately needs.

Misleading Claims and Mounting Risks

We were assured that such things wouldn’t happen. Previously, a senior politician, promoting the largest and riskiest of all investment pacts, declared: “Britain has agreed to investment treaty after trade deal and there has never been a problem in the past.” An adviser on this issue accused activists of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that solely developing countries needed to fear such legal actions. Cautionary notes that “when companies begin to understand the authority they now possess, they will shift their focus from the vulnerable countries to the developed economies” were greeted by general mockery.

That threat has come to pass. This year, oil and gas and mining firms have lodged a record number of cases against nations across the economic spectrum, opposing – as in the case of the UK mine – official measures to stop global warming. Companies have so far won vast sums via ISDS, of which oil majors have secured $84bn. That represents the combined GDP