Hello, Overseas Tycoons and Companies! Please Proceed and Litigate Against the UK for Billions of Pounds.

How do you reckon our political system operates? Maybe similar to this. Citizens choose MPs. They debate and pass bills. Should a majority is secured, the bills become law. The law is upheld by the courts. That's it. Well, that used to be how it operated in the past. Those days are over.

The Emergence of Offshore Courts

Nowadays, international firms, along with the billionaires who own them, can sue governments for the regulations they pass, at secret arbitration panels composed of corporate lawyers. Such disputes take place in secret. In contrast to domestic courts, these panels grant no right of appeal or oversight by judges. You or I cannot take a case to them, nor can our government, or even enterprises headquartered in this country. The door is open exclusively to corporations based overseas.

When a secret court finds that a law or policy may compromise the corporation’s expected profits, it can award damages of vast sums, running into billions.

This compensation constitute not real financial harm but compensation the tribunal officials determine the company could potentially have made. The government might be compelled to rescind the measure. It is discouraged from introducing similar legislation of a similar nature, due to the risk of being sued.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being filed, as companies take cues from each other, and investment funds bankroll lawsuits for a share of a share of the takings. The outcome? Sovereignty and popular rule are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the decisions taken by parliaments is that this stipulation has been inserted – without democratic mandate, and typically amid conditions of profound opacity – within trade treaties.

A Concrete Example: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The presiding officer found that schemes to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had endorsed the questionable argument that the mine could have no consequence on climate commitments. The Labour government later cancelled the permission the former government had granted. Now, this legal outcome faces being overturned by an foreign court answering to only the companies petitioning it.

Last August, a company whose ultimate owners are based in the tax haven filed a lawsuit versus the UK government. Recently a dispute settlement body in the US capital was established to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had received permission to commence operations. Citizens have no clear indication how much this could amount to. What legal team is representing it challenging the state? A sitting MP, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The state enacts a policy, the national judiciary supports it, then a overseas corporation disputes it through an unaccountable offshore tribunal, and a member of our parliament works for its behalf.

A Sanctions Challenge

Simultaneously that the panel on the mining lawsuit was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are scarce of the case to date, but it appears probable that he may employ the ISDS mechanism to challenge the sanctions the UK imposed on him after the Russian aggression. He has previously initiated proceedings against another European state on these grounds, demanding sixteen billion dollars: an amount representing half nation's yearly income. Included in the legal team acting for him in that case? a prominent lawyer, wife of the former British prime minister.

Trade specialists believe that the EU’s delay in utilising seized state funds as collateral for its loan to Ukraine arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a trade agreement. This extraordinary, secretive influence over elected governments might be preventing the funds Ukraine desperately needs.

Empty Promises and Escalating Threats

Politicians promised that these scenarios were not possible. In 2014, a government leader, advocating for the most significant and hazardous of all investment pacts, told us: “We’ve signed trade deal after trade deal and there has not been a problem in the past.” An expert on this matter accused campaigners of “scaremongering … 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 begin to understand the influence bestowed upon them, they will shift their focus from the weak nations to the wealthy nations” were greeted by general mockery.

That warning has now materialised. This year, energy and mining firms have lodged a historic level of claims against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Corporations have so far won vast sums via ISDS, of which energy giants have been awarded the majority. That equates to the combined GDP