Welcome, Foreign Magnates and Corporations! Kindly Proceed and Litigate Against the UK for Vast Sums.

Can you understand our political system operates? Perhaps similar to this. We elect MPs. They vote on bills. When a majority is secured, the bills pass into law. Statutes is upheld by the courts. End of story. Yet, that was how it once functioned. Those days are over.

The Advent of Secret Tribunals

In the modern era, foreign corporations, along with the oligarchs who own them, have the power to sue nation states for the regulations they pass, at private courts staffed by business advocates. Such disputes are conducted away from public scrutiny. Unlike our courts, these panels grant no avenue for appeal or judicial review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies headquartered in this country. The door is open exclusively to entities based overseas.

When a secret court rules that a law or policy may compromise the corporation’s projected profits, it may order compensation of hundreds of millions, running into billions.

This compensation constitute not real financial harm but funds the arbitrators decide the company would perhaps have made. The administration might be compelled to rescind the measure. It becomes discouraged from passing future laws in that area, for fear of facing litigation.

A Mechanism Growing Exponentially

Record numbers of legal actions are being initiated, as firms take cues from each other, and hedge funds fund legal actions in return for a portion of the settlements. The outcome? National sovereignty and popular rule are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump national legislation and the decisions made by elected bodies is that this clause has been inserted – without democratic mandate, and often in an atmosphere of extreme secrecy – within trade treaties.

A Concrete Example: The Whitehaven Coal Mine

A year ago, activists secured a significant win at the high court. The judge determined that proposals to open the first major coal mine in the UK for three decades, in Cumbria, were unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine could have no consequence on our carbon budgets. The Labour government then withdrew the consent the previous administration had issued. Today, this victory faces being overturned by an offshore tribunal reporting to exclusively the corporations filing the suit.

During August, a firm whose beneficial owners are based in the tax haven filed a lawsuit against the UK government. Last week a arbitration panel in the United States was established to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it could have earned if the mine had received permission to go ahead. We have no clear indication how much this sum represents. Which individual is representing it against the state? A sitting MP, and ex-law officer in the outgoing administration, that great patriot the MP. The administration enacts a policy, the high court validates it, then a overseas corporation disputes it through an secretive offshore tribunal, and a elected official works for its behalf.

The Russian Lawsuit

Concurrently that the panel on the mining lawsuit was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case so far, but it appears probable that he’ll use the tribunal to fight the restrictions the UK enacted against him subsequent to the war in Ukraine. He has previously filed a claim against Luxembourg on these grounds, claiming $16bn: half that state's yearly income. Included in the lawyers on his side? the wife of a former prime minister, wife of the ex-UK leader.

Legal experts believe that the EU’s procrastination in leveraging immobilised state funds as security for its aid for Ukraine stems from concerns within Belgium that it could be sued in the offshore corporate courts, under a investment pact. This unprecedented, unaccountable authority over sovereign states may be obstructing the funds Ukraine urgently requires.

Empty Promises and Growing Threats

Politicians promised that such things wouldn’t happen. Previously, a senior politician, promoting the largest and riskiest of all such treaties, told us: “The UK has signed investment treaty after trade deal and there has not been a issue in the past.” An expert on this topic accused activists of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression appeared to be that solely developing countries had to worry about ISDS claims. Cautionary notes that “when companies grasp the power bestowed upon them, they will shift their focus from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That warning has now materialised. In the current period, energy and mining firms have filed a record number of cases against nations rich and poor, challenging – like the example of the UK mine – official measures to prevent climate breakdown. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP