Greetings, Foreign Tycoons and Companies! Please Proceed and Litigate Against the UK for Billions of Pounds.

What is your perceive our political system functions? Maybe similar to this. We elect MPs. They debate and pass bills. When a majority is secured, the bills are enacted as law. The law is maintained by the courts. Simple as that. Yet, that’s how it once functioned. Those days are over.

The Advent of Offshore Arbitration Panels

In the modern era, overseas companies, or the wealthy individuals who own them, can sue nation states for the regulations they pass, at secret arbitration panels made up of commercial attorneys. The cases are conducted in secret. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted only to entities operating from foreign soil.

Should an arbitration panel determines that a legislative action might diminish the corporation’s projected profits, it can award compensation of vast sums, potentially billions.

These sums constitute not actual losses but funds the arbitrators conclude the company might otherwise have made. The state could be forced to drop the legislation. It is hesitant to passing future laws of a similar nature, for fear of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being initiated, as firms learn from each other, and investment funds fund legal actions in return for a portion of the awards. The consequence? Democratic 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 override a country's own laws and the choices taken by elected bodies is that this clause has been written – without public consent, and frequently under conditions of profound opacity – inside trade treaties.

A Specific Example: The Whitehaven Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The justice found that plans to dig the first major coal mine in the UK for a generation, in Cumbria, had been wrongly permitted by the Conservative government, which had endorsed the questionable argument that the mine would have had no consequence on climate commitments. The Labour government then withdrew the permission the Tories had approved. Today, this victory is under threat by an foreign court answering to only the entities filing the suit.

During August, a company whose final controllers reside in the Cayman Islands lodged a claim against the UK government. The previous week a tribunal in the US capital was set up to adjudicate on it.

The claimant is suing the UK for the profits it could have earned if the mine had received permission to go ahead. Citizens have no clear indication how much this sum represents. What legal team is acting on its behalf in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The administration makes a decision, the domestic court validates it, then a overseas corporation contests it through an unaccountable arbitration panel, and a sitting MP represents its behalf.

The Russian Challenge

Simultaneously that the court on the coalmine case was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows little of the case so far, but it is highly possible that he may employ the tribunal to contest the sanctions the UK imposed on him after the Russian aggression. He has already initiated proceedings against another European state on these grounds, demanding sixteen billion dollars: an amount representing half government’s yearly income. Part of the lawyers on his side? a prominent lawyer, married to the previous PM.

Legal experts believe that the EU’s procrastination in leveraging immobilised state funds as guarantee for its loan to Ukraine is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This extraordinary, unaccountable authority over elected governments might be preventing the funds Ukraine desperately needs.

Empty Promises and Mounting Costs

We were assured that such things could not occur. In 2014, a senior politician, advocating for the most significant and hazardous of all investment pacts, declared: “Britain has agreed to trade deal after trade deal and we have never seen a case in the past.” A consultant on this matter described activists of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message appeared to be that only poorer nations had to worry about such legal actions. Cautionary notes that “once firms grasp the power bestowed upon them, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with widespread derision.

That warning is now a reality. Recently, fossil fuel and mining firms have lodged a historic level of claims against nations across the economic spectrum, opposing – like the example of the UK mine – government attempts to prevent environmental catastrophe. Firms have so far won vast sums via ISDS, of which fossil fuel companies have been awarded the majority. That is equivalent to the combined GDP