Welcome, International Tycoons and Corporations! Kindly Proceed and Take Legal Action Against the UK for Billions of Pounds.

What is your perceive our political system operates? Maybe something like this. The public votes for MPs. They debate and pass bills. If a majority is obtained, the bills are enacted as law. Legislation is maintained by the courts. Simple as that. Yet, that’s how it operated in the past. No longer.

The Emergence of Secret Tribunals

In the modern era, international firms, or the oligarchs behind them, have the power to sue governments for the policies they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings are held in secret. Unlike our courts, these tribunals provide no right of appeal or oversight by judges. You or I are unable to file a case to them, just as our government, or even companies headquartered in this country. Access is granted only to businesses operating from foreign soil.

Should an arbitration panel determines that a legislative action could harm the corporation’s expected profits, it may order damages of vast sums, potentially billions.

This compensation are based not on tangible damages but money the panel members decide the company might otherwise have made. The administration might be compelled to abandon its policy. It is deterred from enacting future policies of a similar nature, due to the risk of incurring a lawsuit.

A Mechanism Growing Exponentially

Unprecedented levels of cases are being initiated, as companies learn from each other, and hedge funds bankroll lawsuits in return for a cut of the awards. The consequence? National sovereignty and democracy are turning into too costly.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump national legislation and the rulings taken by parliaments is that this provision has been incorporated – without public consent, and typically amid an atmosphere of total confidentiality – inside international trade agreements.

A Concrete Instance: The Whitehaven Coalmine

Twelve months ago, activists achieved a major legal triumph at the senior court. The judge found that proposals to open the first deep coalmine in the UK for 30 years, in northwest England, were unlawfully approved by the previous government, which had accepted the bizarre claim that the mine would have no impact on climate commitments. The Labour government then withdrew the licence the former government had issued. Currently, this victory could be compromised by an secret arbitration panel accountable to only the corporations filing the suit.

During August, a corporate entity whose ultimate owners reside in the offshore financial centre filed a lawsuit versus the UK government. The previous week a arbitration panel in the United States was set up to consider the case.

This firm is suing the UK for the profits it would have generated if the mine had been allowed to proceed. The public has little idea how much this might be. What legal team is acting on its behalf against the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the high court validates it, then a overseas corporation challenges it through an secretive private court, and a elected official represents its behalf.

The Russian Case

Concurrently that the court on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case so far, but it is highly possible that he’ll use the tribunal to fight the restrictions the UK imposed on him following the war in Ukraine. He has already started suing Luxembourg for this reason, claiming $16bn: equivalent to half of nation's annual revenue. Included in the lawyers representing him there? the wife of a former prime minister, wife of the previous PM.

Legal experts believe that the EU’s procrastination in using frozen state funds as collateral for its loan to Ukraine arises from apprehension in Brussels that it could be sued in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations may be obstructing the funds Ukraine urgently requires.

Empty Promises and Mounting Risks

The public was told that such things could not occur. In 2014, a government leader, promoting the most significant and hazardous of all these agreements, stated: “Britain has agreed to trade agreement upon trade deal and we have never seen a problem in the past.” An adviser on this topic accused critics of “exaggeration … in reality, ISDS has little impact on the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “once firms start to realise the influence they’ve been granted, they will shift their focus from the weak nations to the strong ones” were met with general mockery.

That threat is now a reality. This year, energy and mining firms have lodged a unprecedented number of claims against nations across the economic spectrum, opposing – like the example of the UK mine – official measures to prevent climate breakdown. Corporations have to date won $114bn through ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP