Greetings, International Magnates and Companies! Kindly Come and Take Legal Action Against the UK for Billions.

What is your perceive our political system functions? It could be similar to this. The public votes for MPs. They debate and pass bills. Should a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. That's it. Yet, that’s how it used to work. Not anymore.

The Rise of Shadow Tribunals

In the modern era, international firms, and the billionaires who own them, can sue governments for the policies they pass, at secret arbitration panels staffed by corporate lawyers. The cases are conducted in secret. Unlike our courts, these panels grant no right of appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, including businesses based in this country. Access is granted solely for corporations registered abroad.

If a tribunal finds that a law or policy might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, running into billions.

This compensation represent not real financial harm but money the panel members decide the company would perhaps have made. The government might be compelled to abandon its policy. It will be hesitant to enacting future policies in that area, worried about facing litigation.

A System Spiralling Out of Control

Record numbers of disputes are being initiated, as corporations observe each other, and private equity finance suits for a share of a portion of the settlements. The outcome? National sovereignty and democratic governance are turning into too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump national legislation and the rulings made by parliaments is that this provision has been inserted – absent public approval, and frequently under conditions of extreme secrecy – into bilateral investment treaties.

A Specific Example: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the high court. The presiding officer ruled that schemes to open the first major coal mine in the UK for a generation, in northwest England, were unlawfully approved by the outgoing administration, which had accepted the bizarre claim that the mine would have had no consequence on our carbon budgets. The Labour government then withdrew the consent the Tories had granted. Today, this success could be compromised by an foreign court answering to exclusively the entities bringing the case.

Last August, a corporate entity whose ultimate owners are located in the Cayman Islands lodged a claim against the UK government. Recently a dispute settlement body in the US capital was established to consider the case.

The claimant is suing the UK for the revenue it would have generated if the mine had received permission to commence operations. We have no idea how much this sum represents. Who is serving as its counsel challenging the state? A member of parliament, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the high court validates it, then a international entity contests it through an unaccountable private court, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

Concurrently that the panel on the mining lawsuit was appointed, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are scarce of the case so far, but it is highly possible that he will utilise the tribunal to fight the penalties the UK imposed on him subsequent to the war in Ukraine. He has filed a claim against a small nation on these grounds, seeking a colossal sum: equivalent to half of nation's yearly income. Included in the counsel acting for him in that case? Cherie Blair, married to the previous PM.

International law scholars argue that the EU’s delay in leveraging immobilised Russian assets as security for its aid for Ukraine stems from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

False Assurances and Growing Risks

Politicians promised that these events wouldn’t happen. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, stated: “The UK has signed investment treaty upon trade deal and there has not been a problem in the past.” An adviser on this issue accused campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that only poorer nations had to worry about such legal actions. Predictions that “as corporations begin to understand the authority they now possess, they will shift their focus from the weak nations to the developed economies” were met with widespread derision.

That warning has come to pass. In the current period, fossil fuel and resource corporations have lodged a unprecedented number of claims against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – official measures to prevent global warming. Firms have thus far won vast sums by using ISDS, of which energy giants have obtained eighty-four billion dollars. That is equivalent to the combined GDP