Greetings, Foreign Tycoons and Companies! Kindly Come and Litigate Against the UK for Vast Sums.

Can you understand our democratic process works? It could be along the lines of this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. That's it. However, that was how it operated in the past. Not anymore.

The Rise of Offshore Tribunals

Today, overseas companies, or the wealthy individuals who own them, are able to litigate against elected administrations for the laws they pass, at private courts composed of corporate lawyers. These proceedings take place away from public scrutiny. Unlike our courts, these tribunals provide no avenue for appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, or even enterprises operating from this country. The door is open exclusively to businesses operating from foreign soil.

Should an arbitration panel determines that a law or policy could harm the corporation’s projected profits, it can award damages of hundreds of millions of pounds, potentially billions.

This compensation are based not on real financial harm but money the arbitrators decide the company could potentially have made. The administration might be compelled to rescind the measure. It will be discouraged from enacting future policies along the same lines, due to the risk of facing litigation.

A Mechanism Spiralling Out of Control

Record numbers of legal actions are being brought, as firms observe each other, and hedge funds bankroll lawsuits in exchange for a cut of the awards. The consequence? National sovereignty and popular rule are turning into prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the choices enacted by legislatures is that this stipulation has been incorporated – without public consent, and frequently under an atmosphere of extreme secrecy – into international trade agreements.

A Specific Instance: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the high court. The presiding officer found that schemes to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were found to be wrongly permitted by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no impact on our carbon budgets. The incoming administration later cancelled the permission the previous administration had granted. Currently, this legal outcome could be compromised by an foreign court answering to only the corporations bringing the case.

During August, a firm whose final controllers are located in the tax haven filed a lawsuit versus the UK government. Last week a arbitration panel in the United States was set up to hear it.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to proceed. Citizens have no clear indication how much this might be. Who is representing it in opposition to the British government? An elected representative, and former attorney-general in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The government passes a law, the national judiciary upholds it, then a foreign company contests it through an undemocratic private court, and a elected official represents its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coal mine dispute was convened, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case to date, but it seems likely that he’ll use the arbitration process to fight the penalties the UK enacted against him subsequent to the Russian aggression. He has filed a claim against another European state with similar intent, demanding $16bn: an amount representing half nation's yearly budget. Part of the counsel acting for him in that case? a prominent lawyer, wife of the previous PM.

Trade specialists argue that the EU’s delay in utilising seized oligarchs' funds as collateral for its financial support package is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over sovereign states could be blocking the finance Ukraine desperately needs.

Empty Promises and Escalating Threats

We were assured that these events could not occur. In 2014, a senior politician, promoting the most significant and hazardous of all such treaties, told us: “The UK has signed trade agreement after trade deal and there has not been a problem in the past.” A consultant on this issue accused activists of “alarmism … in reality, ISDS barely touches the UK much”. The overall message was crafted to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “as corporations start to realise the authority they’ve been granted, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with scepticism.

That warning is now a reality. In the current period, oil and gas and extraction companies have filed a historic level of claims against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – official measures to halt environmental catastrophe. Companies have so far won vast sums through ISDS, of which energy giants have secured the majority. That represents the combined GDP