Welcome, Foreign Oligarchs and Firms! Kindly Proceed and Litigate Against the UK for Billions.

What is your understand our political system functions? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. When a majority is secured, the bills pass into law. Legislation is upheld by the courts. That's it. Yet, that was how it once functioned. Not anymore.

The Advent of Secret Courts

Today, foreign corporations, or the oligarchs that control them, are able to litigate against nation states for the policies they pass, at private courts composed of commercial attorneys. These proceedings are held in secret. In contrast to domestic courts, these tribunals allow no opportunity to appeal or legal review. You or I cannot take a case to them, just as our government, including businesses based in this country. The door is open exclusively to entities based overseas.

If a tribunal determines that a legislative action might diminish the corporation’s expected profits, it may order compensation of vast sums, even billions.

This compensation are based not on tangible damages but funds the panel members decide the company could potentially have made. The state might be compelled to abandon its policy. It will be deterred from introducing similar legislation in that area, for fear of incurring a lawsuit.

A System Running Rampant

Record numbers of disputes are being initiated, as firms take cues from each other, and investment funds fund legal actions in exchange for a share of the awards. The consequence? National sovereignty and popular rule are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the choices enacted by legislatures is that this stipulation has been written – without democratic mandate, and frequently under conditions of total confidentiality – into trade treaties.

A Specific Instance: The UK Coalmine

Last year, a conservation group achieved a major legal triumph at the high court. The justice found that plans to open the first major coal mine in the UK for three decades, in Cumbria, had been unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine would have no consequence on climate commitments. The Labour government later cancelled the consent the Tories had approved. Today, this legal outcome could be compromised by an secret arbitration panel reporting to only the companies bringing the case.

In August, a firm whose ultimate owners reside in the offshore financial centre lodged a claim challenging the UK government. Recently a dispute settlement body in the United States was convened to hear it.

The claimant is litigating against the UK for the money it could have earned if the mine had received permission to commence operations. The public has little idea how much this could amount to. What legal team is serving as its counsel in opposition to the British government? An elected representative, and ex-law officer in the previous government, the self-proclaimed patriot Geoffrey Cox. The government passes a law, the domestic court validates it, then a international entity challenges it through an unaccountable private court, and a elected official acts on its behalf.

A Sanctions Challenge

Concurrently that the panel on the coal mine dispute was established, information emerged from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know little of the case at present, but it is highly possible that he may employ the arbitration process to challenge the restrictions the UK imposed on him after the Russian aggression. He has filed a claim against another European state for this reason, seeking $16bn: half that state's yearly income. Part of the legal team on his side? a prominent lawyer, married to the former British prime minister.

International law scholars contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its loan to Ukraine stems from apprehension in Brussels that it could be sued in the offshore corporate courts, under a trade agreement. This remarkable, undemocratic power over sovereign states might be preventing the funds Ukraine desperately needs.

Empty Promises and Escalating Costs

The public was told that these events wouldn’t happen. In 2014, a senior politician, promoting the most significant and hazardous of all these agreements, stated: “The UK has signed trade agreement after trade deal and there has not been a case in the past.” An expert on this matter described activists of “exaggeration … the truth is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that exclusively weaker states should be concerned by such legal actions. Predictions that “as corporations begin to understand the influence they now possess, they will redirect their efforts from the poorer states to the wealthy nations” were greeted by widespread derision.

That threat is now a reality. This year, oil and gas and mining firms have initiated a historic level of cases against nations rich and poor, challenging – similar to the Cumbrian coalmine – state efforts to halt climate breakdown. Companies have to date won vast sums through ISDS, of which fossil fuel companies have been awarded $84bn. That represents the combined GDP