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

Can you reckon our political system functions? Perhaps similar to this. Citizens choose MPs. They vote on bills. When a majority is secured, the bills pass into law. Statutes is maintained by the courts. End of story. Well, that’s how it operated in the past. No longer.

The Advent of Secret Courts

Nowadays, foreign corporations, and the oligarchs who own them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals made up of corporate lawyers. The cases are conducted away from public scrutiny. Unlike our courts, these panels provide no right of appeal or legal review. You or I cannot take a case to them, and neither can our government, including businesses based in this country. They are open solely for businesses registered abroad.

When a secret court finds that a government measure could harm the corporation’s expected profits, it may order damages of hundreds of millions of pounds, even billions.

These awards constitute not actual losses but compensation the panel members conclude the company might otherwise have made. The government could be forced to rescind the measure. It becomes discouraged from passing future laws in that area, due to the risk of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being filed, as companies observe each other, and investment funds finance suits for a share of a portion of the awards. The consequence? Sovereignty and democracy are turning into too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the decisions made by legislatures is that this provision has been written – absent public approval, and often in an atmosphere of total confidentiality – within trade treaties.

A Specific Instance: The Cumbrian Coal Mine

Twelve months ago, a conservation group won a great victory at the senior court. The justice determined that proposals to open the first major coal mine in the UK for 30 years, in northwest England, had been wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine could have no consequence on our carbon budgets. The Labour government subsequently revoked the permission the previous administration had issued. Today, this victory is under threat by an offshore tribunal accountable to exclusively the entities bringing the case.

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

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had received permission to commence operations. Citizens have no idea how much this might be. Which individual is serving as its counsel in opposition to the UK administration? A sitting MP, and former attorney-general in the outgoing administration, the self-proclaimed patriot the MP. The administration passes a law, the high court validates it, then a foreign company challenges it through an secretive private court, and a sitting MP acts on its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coal mine dispute was established, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case so far, but it appears probable that he may employ the tribunal to challenge the penalties the UK enacted against him after the Russian aggression. He has filed a claim against Luxembourg with similar intent, demanding $16bn: equivalent to half of government’s yearly budget. Among the counsel on his side? the wife of a former prime minister, wife of the former British prime minister.

International law scholars believe that the EU’s delay in using frozen state funds as security for its financial support package stems from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over elected governments may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Growing Risks

We were assured that such things could not occur. In 2014, a senior politician, promoting the most significant and hazardous of all these agreements, told us: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” An expert on this matter accused activists of “alarmism … the fact is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by such legal actions. Predictions that “when companies grasp the power they now possess, they will shift their focus from the vulnerable countries to the developed economies” were met with scepticism.

That warning has come to pass. In the current period, fossil fuel and extraction companies have initiated a historic level of cases against nations rich and poor, opposing – as in the case of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have secured $84bn. That equates to the combined GDP