Greetings, Overseas Tycoons and Corporations! Kindly Proceed and Litigate Against the UK for Billions of Pounds.

Can you understand our political system operates? It could be similar to this. Citizens choose MPs. They legislate on 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. Not anymore.

The Advent of Shadow Tribunals

Today, overseas companies, along with the wealthy individuals behind them, can sue governments for the policies they pass, at private courts staffed by commercial attorneys. Such disputes are conducted behind closed doors. Unlike our courts, these tribunals provide no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, and neither can our government, including companies operating from this country. Access is granted exclusively to entities registered abroad.

When a secret court determines that a legislative action may compromise the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, running into billions.

This compensation represent not real financial harm but funds the tribunal officials decide the company would perhaps have made. The government may have to drop the legislation. It is discouraged from introducing similar legislation of a similar nature, due to the risk of facing litigation.

A Process Running Rampant

Unprecedented levels of legal actions are being brought, as corporations learn from each other, and private equity finance suits in return for a share of the settlements. The result? Democratic sovereignty and popular rule are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede national legislation and the rulings made by parliaments is that this stipulation has been written – without public consent, and typically amid a climate of total confidentiality – within trade treaties.

A Specific Instance: The Whitehaven Coal Mine

Last year, activists achieved a major legal triumph at the high court. The presiding officer determined that proposals to dig the first major coal mine in the UK for 30 years, in northwest England, had been wrongly permitted by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no impact on national carbon targets. The Labour government subsequently revoked the licence the previous administration had issued. Now, this legal outcome is under threat by an offshore tribunal accountable to only the companies bringing the case.

Last August, a firm whose ultimate owners reside in the Cayman Islands lodged a claim versus the UK government. The previous week a dispute settlement body in the US capital was established to hear it.

This firm is litigating against the UK for the profits it might have made if the mine had received permission to go ahead. Citizens have little idea how much this might be. Who is acting on its behalf against the UK administration? An elected representative, and ex-law officer in the outgoing administration, the noted patriot Geoffrey Cox. The state makes a decision, the domestic court supports it, then a foreign company disputes it through an secretive private court, and a sitting MP represents its behalf.

The Russian Challenge

Concurrently that the panel on the mining lawsuit was established, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know little of the case to date, but it appears probable that he may employ the ISDS mechanism to challenge the restrictions the UK levied against him subsequent to the Russian aggression. He has initiated proceedings against a small nation for this reason, claiming sixteen billion dollars: equivalent to half of government’s annual revenue. Among the legal team representing him there? the wife of a former prime minister, wife of the previous PM.

Legal experts argue that the EU’s delay in leveraging immobilised oligarchs' funds as security for its financial support package is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This unprecedented, undemocratic power over democratic administrations could be blocking the money Ukraine urgently requires.

False Assurances and Mounting Costs

Politicians promised that such things wouldn’t happen. In 2014, a senior politician, promoting the biggest and most dangerous of all these agreements, stated: “We’ve signed trade deal after trade deal and there has never been a problem in the past.” An adviser on this matter described critics of “alarmism … the fact is, ISDS barely touches the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by such legal actions. Predictions that “once firms grasp the influence they’ve been granted, they will shift their focus from the vulnerable countries to the developed economies” were met with general mockery.

That threat has now materialised. In the current period, energy and mining firms have initiated a record number of suits against nations both wealthy and developing, opposing – similar to the UK mine – official measures to prevent global warming. Firms have thus far won vast sums by using ISDS, of which fossil fuel companies have secured $84bn. That is equivalent to the combined GDP