Greetings, Overseas Tycoons and Companies! Kindly Come and Sue the UK for Vast Sums.

What is your understand our political system operates? Maybe something like this. The public votes for MPs. They vote on bills. If a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. Simple as that. However, that used to be how it once functioned. No longer.

The Advent of Shadow Arbitration Panels

In the modern era, international firms, along with the oligarchs behind them, can sue nation states for the policies they pass, at offshore tribunals composed of business advocates. These proceedings are conducted behind closed doors. Differing from national judiciaries, these bodies grant no avenue for appeal or judicial review. Ordinary citizens are unable to file a case to them, just as our government, including enterprises headquartered in this country. They are open exclusively to entities based overseas.

When a secret court finds that a law or policy may compromise the corporation’s anticipated profits, it may order compensation of vast sums, even billions.

This compensation constitute not real financial harm but money the panel members conclude the company might otherwise have made. The government might be compelled to abandon its policy. It will be hesitant to introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A System Running Rampant

Historically high figures of cases are being initiated, as firms take cues from each other, and private equity fund legal actions for a share of a share of the awards. The consequence? Sovereignty and popular rule are turning into too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override a country's own laws and the choices enacted by parliaments is that this stipulation has been incorporated – without public consent, and typically amid an atmosphere of extreme secrecy – within bilateral investment treaties.

A Real-World Example: The UK Coalmine

Last year, activists achieved a major legal triumph at the high court. The justice found that plans to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine would have had no impact on climate commitments. The Labour government then withdrew the consent the former government had granted. Now, this legal outcome faces being overturned by an foreign court answering to only the corporations filing the suit.

During August, a corporate entity whose ultimate owners are located in the offshore financial centre filed a lawsuit versus the UK government. The previous week a dispute settlement body in Washington DC was established to hear it.

The claimant is suing the UK for the profits it would have generated if the mine had been permitted to go ahead. We have no idea how much this might be. Which individual is representing it challenging the UK administration? An elected representative, and former attorney-general in the Conservative government, that great patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a overseas corporation disputes it through an unaccountable private court, and a sitting MP acts on its behalf.

A Sanctions Case

Simultaneously that the court on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are nothing of the case so far, but it is highly possible that he may employ the arbitration process to challenge the penalties the UK levied against him subsequent to the Russian aggression. He has started suing a small nation for this reason, seeking $16bn: equivalent to half of nation's annual revenue. Among the lawyers acting for him in that case? a prominent lawyer, married to the previous PM.

International law scholars contend that the EU’s delay in leveraging immobilised state funds as security for its loan to Ukraine is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, secretive influence over democratic administrations could be blocking the finance Ukraine desperately needs.

Misleading Claims and Mounting Risks

Politicians promised that these scenarios were not possible. In 2014, a senior politician, advocating for the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade deal upon trade deal and there has not been a problem in the past.” An expert on this issue accused campaigners of “exaggeration … in reality, ISDS barely touches the UK much”. The general impression seemed to be that exclusively weaker states had to worry about these lawsuits. Cautionary notes that “as corporations grasp the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the developed economies” were met with scepticism.

That threat has come to pass. In the current period, energy and mining firms have initiated a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – government attempts to halt environmental catastrophe. Companies have to date won $114bn through ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP