Greetings, Overseas Oligarchs and Corporations! Please Proceed and Litigate Against the UK for Billions of Pounds.

What is your perceive our system of government functions? It could be along the lines of this. Citizens choose MPs. They debate and pass bills. Should a majority is achieved, the bills pass into law. The law is upheld by the courts. End of story. Yet, that’s how it operated in the past. Not anymore.

The Emergence of Offshore Tribunals

Today, international firms, or the oligarchs that control them, have the power to sue elected administrations for the policies they pass, at private courts composed of business advocates. These proceedings take place away from public scrutiny. Differing from national judiciaries, these bodies grant no right of appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, including companies based in this country. The door is open solely for businesses operating from foreign soil.

Should an arbitration panel rules that a government measure could harm the corporation’s expected profits, it has the power to grant damages of hundreds of millions, potentially billions.

This compensation constitute not real financial harm but funds the arbitrators conclude the company could potentially have made. The government may have to drop the legislation. It will be deterred from enacting future policies along the same lines, for fear of facing litigation.

A Mechanism Running Rampant

Unprecedented levels of disputes are being initiated, as corporations take cues from each other, and investment funds finance suits in return for a portion of the awards. The result? National sovereignty and popular rule are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The reason it can trump national legislation and the decisions taken by legislatures is that this stipulation has been inserted – absent public approval, and frequently under a climate of profound opacity – inside international trade agreements.

A Concrete Example: The Cumbrian Coalmine

Last year, a conservation group secured a significant win at the senior court. The presiding officer ruled that schemes to excavate the first deep coalmine in the UK for three decades, in northwest England, had been illegally sanctioned by the outgoing administration, which had accepted the bizarre claim that the mine could have no consequence on our carbon budgets. The Labour government later cancelled the permission the Tories had approved. Currently, this success faces being overturned by an foreign court answering to exclusively the entities filing the suit.

During August, a company whose beneficial owners reside in the tax haven lodged a claim against the UK government. Recently a tribunal in the US capital was established to consider the case.

This firm is litigating against the UK for the revenue it could have earned if the mine had received permission to commence operations. Citizens have little idea how much this sum represents. What legal team is acting on its behalf challenging the state? An elected representative, and previous senior legal advisor in the outgoing administration, the noted patriot the MP. The government enacts a policy, the domestic court supports it, then a foreign company contests it through an undemocratic offshore tribunal, and a elected official works for its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the mining lawsuit was appointed, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case so far, but it appears probable that he may employ the arbitration process to contest the restrictions the UK levied against him subsequent to the invasion of Ukraine. He has previously started suing another European state with similar intent, demanding sixteen billion dollars: half that nation's yearly income. Included in the counsel acting for him in that case? Cherie Blair, married to the former British prime minister.

International law scholars believe that the EU’s delay in using frozen Russian assets as guarantee for its financial support package is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This extraordinary, undemocratic power over elected governments could be blocking the finance Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these scenarios could not occur. Previously, a government leader, championing the biggest and most dangerous of all investment pacts, stated: “We’ve signed trade agreement after trade deal and we have never seen a case in the past.” A consultant on this topic described campaigners of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear ISDS claims. Predictions that “when companies grasp the influence they’ve been granted, they will turn their attention from the poorer states to the developed economies” were met with general mockery.

That prediction has now materialised. In the current period, oil and gas and extraction companies have filed a record number of suits against nations rich and poor, contesting – similar to the UK mine – state efforts to halt global warming. Corporations have to date won $114bn by using ISDS, of which energy giants have obtained eighty-four billion dollars. That is equivalent to the combined GDP