Greetings, Foreign Oligarchs and Companies! Kindly Come and Sue the UK for Billions.

How do you understand our system of government functions? It could be similar to this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. Simple as that. Yet, that was how it used to work. No longer.

The Emergence of Secret Tribunals

Today, overseas companies, and the wealthy individuals behind them, can sue governments for the laws they pass, at private courts made up of business advocates. Such disputes take place away from public scrutiny. Differing from national judiciaries, these bodies provide no right of appeal or legal review. The general public are unable to file a case to them, just as our government, or even businesses operating from this country. Access is granted exclusively to businesses operating from foreign soil.

When a secret court determines that a government measure might diminish the corporation’s expected profits, it may order damages of hundreds of millions, running into billions.

These awards constitute not tangible damages but funds the tribunal officials decide the company could potentially have made. The administration may have to abandon its policy. It is deterred from introducing similar legislation along the same lines, due to the risk of incurring a lawsuit.

A Mechanism Growing Exponentially

Unprecedented levels of legal actions are being brought, as companies observe each other, and private equity bankroll lawsuits in return for a portion of the takings. The result? National sovereignty and democracy are becoming prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede national legislation and the rulings made by parliaments is that this provision has been inserted – without democratic mandate, and frequently under a climate of profound opacity – within trade treaties.

A Specific Example: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The judge found that plans to open the first major coal mine in the UK for a generation, in northwest England, were found to be unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have no consequence on national carbon targets. The incoming administration subsequently revoked the consent the Tories had granted. Currently, this success could be compromised by an secret arbitration panel accountable to exclusively the corporations filing the suit.

Last August, a firm whose ultimate owners are located in the offshore financial centre initiated proceedings versus the UK government. Recently a arbitration panel in Washington DC was convened to adjudicate on it.

The claimant is litigating against the UK for the revenue it could have earned if the mine had been allowed to go ahead. Citizens have no clear indication how much this could amount to. What legal team is serving as its counsel against the state? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a foreign company contests it through an undemocratic arbitration panel, and a sitting MP works for its behalf.

A Sanctions Lawsuit

Concurrently that the court on the coalmine case was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. The public knows scarce of the case at present, but it is highly possible that he will utilise the ISDS mechanism to contest the penalties the UK imposed on him subsequent to the invasion of Ukraine. He has previously filed a claim against another European state with similar intent, demanding a colossal sum: half that state's annual revenue. Among the legal team acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

International law scholars contend that the EU’s hesitation in using frozen Russian assets as collateral for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a trade agreement. This unprecedented, unaccountable authority over sovereign states may be obstructing the funds Ukraine critically depends on.

Empty Promises and Mounting Threats

Politicians promised that these events could not occur. Years ago, a former prime minister, championing the most significant and hazardous of all such treaties, told us: “Britain has agreed to trade agreement upon trade deal and we have never seen a case in the past.” An adviser on this issue labelled critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about such legal actions. Cautionary notes that “as corporations begin to understand the power they’ve been granted, they will redirect their efforts from the poorer states to the developed economies” were met with general mockery.

That prediction has come to pass. Recently, oil and gas and extraction companies have lodged a unprecedented number of claims against nations across the economic spectrum, opposing – like the example of the Whitehaven project – official measures to stop environmental catastrophe. Companies have to date won $114bn through ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP