Greetings, International Magnates and Corporations! Kindly Proceed and Sue the UK for Vast Sums.

Can you understand our democratic process operates? Maybe along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. Simple as that. However, that’s how it used to work. Those days are over.

The Advent of Secret Arbitration Panels

In the modern era, international firms, along with the oligarchs that control them, are able to litigate against governments for the regulations they pass, at offshore tribunals staffed by commercial attorneys. The cases are held behind closed doors. In contrast to domestic courts, these tribunals provide no right of appeal or legal review. You or I cannot take a case to them, nor can our government, including enterprises operating from this country. The door is open only to corporations operating from foreign soil.

When a secret court finds that a government measure might diminish the corporation’s expected profits, it has the power to grant damages of vast sums, even billions.

These awards represent not real financial harm but funds the arbitrators determine the company might otherwise have made. The government may have to drop the legislation. It becomes deterred from introducing similar legislation of a similar nature, for fear of incurring a lawsuit.

A Mechanism Growing Exponentially

Historically high figures of cases are being filed, as firms learn from each other, and investment funds finance suits in exchange for a portion of the settlements. The result? National sovereignty and democratic governance are turning into too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump a country's own laws and the choices taken by elected bodies is that this stipulation has been incorporated – absent public approval, and frequently under an atmosphere of profound opacity – inside international trade agreements.

A Specific Case: The UK Coal Mine

A year ago, activists won a great victory at the High Court. The justice found that proposals to open the first deep coalmine in the UK for a generation, in northwest England, had been wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have no impact on climate commitments. The new government then withdrew the licence the former government had approved. Today, this success could be compromised by an offshore tribunal answering to only the entities petitioning it.

Last August, a corporate entity whose beneficial owners reside in the Cayman Islands initiated proceedings against the UK government. Recently a arbitration panel in the US capital was convened to adjudicate on it.

This firm is seeking compensation from the UK for the profits it might have made if the mine had been allowed to commence operations. We have little idea how much this might be. Who is acting on its behalf against the state? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a elected official represents its behalf.

The Russian Case

Concurrently that the court on the coal mine dispute was established, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are little of the case to date, but it is highly possible that he’ll use the ISDS mechanism to challenge the restrictions the UK levied against him following the invasion of Ukraine. He has already initiated proceedings against a small nation for this reason, demanding sixteen billion dollars: an amount representing half nation's yearly budget. Part of the lawyers on his side? the wife of a former prime minister, spouse of the previous PM.

Legal experts believe that the EU’s procrastination in utilising seized oligarchs' funds as security for its aid for Ukraine arises from concerns within Belgium that it could be sued in the offshore corporate courts, under a investment pact. This unprecedented, unaccountable authority over democratic administrations might be preventing the money Ukraine desperately needs.

Misleading Claims and Mounting Risks

We were assured that these scenarios could not occur. Previously, a government leader, advocating for the largest and riskiest of all investment pacts, declared: “We’ve signed trade agreement upon trade deal and there has not been a case in the past.” An expert on this issue accused activists of “scaremongering … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states had to worry about these lawsuits. Warnings that “once firms grasp the authority bestowed upon them, they will shift their focus from the vulnerable countries to the developed economies” were met with widespread derision.

That warning has now materialised. In the current period, fossil fuel and resource corporations have initiated a record number of claims against nations across the economic spectrum, contesting – similar to the UK mine – official measures to halt climate breakdown. Corporations have to date won vast sums through ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP