Welcome, Foreign Tycoons and Corporations! Please Proceed and Sue the UK for Vast Sums.

What is your understand our democratic process functions? Maybe along the lines of this. The public votes for MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. The law is upheld by the courts. Simple as that. Yet, that was how it once functioned. Not anymore.

The Emergence of Secret Courts

Nowadays, overseas companies, and the billionaires that control them, have the power to sue nation states for the laws they pass, at offshore tribunals composed of business advocates. Such disputes are held behind closed doors. Unlike our courts, these bodies grant no opportunity to appeal or judicial review. You or I are unable to file a case to them, just as our government, or even enterprises based in this country. Access is granted solely for entities based overseas.

Should an arbitration panel determines that a law or policy may compromise the corporation’s projected profits, it has the power to grant compensation of hundreds of millions of pounds, potentially billions.

These sums constitute not tangible damages but funds the tribunal officials determine the company might otherwise have made. The administration may have to abandon its policy. It is hesitant to passing future laws in that area, worried about being sued.

A Process Spiralling Out of Control

Record numbers of disputes are being filed, as companies learn from each other, and private equity fund legal actions in return for a cut of the settlements. The outcome? Sovereignty and democratic governance are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the choices taken by elected bodies is that this provision has been written – without public consent, and typically amid conditions of profound opacity – within bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the high court. The presiding officer ruled that plans to dig the first deep coalmine in the UK for a generation, in Cumbria, were wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have no impact on national carbon targets. The Labour government later cancelled the licence the previous administration had approved. Currently, this legal outcome is under threat by an offshore tribunal reporting to no one but the entities bringing the case.

During August, a company whose final controllers are based in the Cayman Islands initiated proceedings versus the UK government. The previous week a dispute settlement body in the United States was set up to hear it.

The company is litigating against the UK for the profits it might have made if the mine had received permission to go ahead. The public has no clear indication how much this sum represents. Who is representing it against the British government? A sitting MP, and former attorney-general in the Conservative government, that great patriot Geoffrey Cox. The administration enacts a policy, the high court validates it, then a overseas corporation disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the court on the mining lawsuit was convened, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case to date, but it seems likely that he will utilise the arbitration process to fight the restrictions the UK levied against him after the war in Ukraine. He has already filed a claim against Luxembourg on these grounds, demanding a colossal sum: half that nation's yearly income. Included in the lawyers representing him there? Cherie Blair, married to the former British prime minister.

Legal experts contend that the EU’s delay in leveraging immobilised oligarchs' funds as security for its aid for Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, unaccountable authority over elected governments may be obstructing the finance Ukraine desperately needs.

Empty Promises and Escalating Costs

The public was told that such things wouldn’t happen. Previously, a senior politician, championing the largest and riskiest of all investment pacts, told us: “Britain has agreed to trade agreement after trade deal and we have never seen a case in the past.” An adviser on this matter described activists of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries had to worry about ISDS claims. Cautionary notes that “when companies start to realise the authority they’ve been granted, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with general mockery.

That warning has now materialised. Recently, energy and mining firms have initiated a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the Whitehaven project – state efforts to prevent environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which oil majors have secured $84bn. That is equivalent to the combined GDP