Welcome, International Oligarchs and Corporations! Please Proceed and Take Legal Action Against the UK for Vast Sums.

What is your understand our democratic process operates? Perhaps along the lines of this. We elect MPs. They legislate on bills. When a majority is obtained, the bills are enacted as law. Legislation is maintained by the courts. End of story. Well, that was how it used to work. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, and the billionaires behind them, are able to litigate against elected administrations for the regulations they pass, at secret arbitration panels staffed by business advocates. Such disputes are conducted behind closed doors. In contrast to domestic courts, these bodies provide no avenue for appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, or even businesses operating from this country. The door is open exclusively to corporations registered abroad.

Should an arbitration panel determines that a legislative action might diminish the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions, running into billions.

These sums constitute not tangible damages but money the tribunal officials determine the company would perhaps have made. The administration may have to rescind the measure. It is discouraged from passing future laws in that area, due to the risk of being sued.

A System Growing Exponentially

Historically high figures of cases are being brought, as firms observe each other, and investment funds finance suits for a share of a cut of the awards. The outcome? Sovereignty and democratic governance are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the decisions taken by parliaments is that this provision has been written – without democratic mandate, and typically amid a climate of total confidentiality – inside international trade agreements.

A Specific Instance: The Whitehaven Coalmine

Twelve months ago, activists secured a significant win at the high court. The presiding officer determined that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine could have zero effect on our carbon budgets. The Labour government subsequently revoked the permission the former government had granted. Now, this success is under threat by an offshore tribunal reporting to no one but the entities filing the suit.

During August, a company whose beneficial owners are located in the tax haven initiated proceedings against the UK government. The previous week a arbitration panel in the US capital was established to consider the case.

This firm is suing the UK for the money it could have earned if the mine had been permitted to go ahead. We have no idea how much this might be. Which individual is acting on its behalf against the UK administration? A member of parliament, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court upholds it, then a foreign company contests it through an secretive arbitration panel, and a elected official works for its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the mining lawsuit was appointed, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case so far, but it appears probable that he’ll use the ISDS mechanism to contest the sanctions the UK levied against him after the Russian aggression. He has already filed a claim against Luxembourg on these grounds, demanding a colossal sum: equivalent to half of state's annual revenue. Included in the counsel acting for him in that case? Cherie Blair, wife of the former British prime minister.

Trade specialists believe that the EU’s delay in using frozen Russian assets as security for its financial support package arises from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over sovereign states could be blocking the finance Ukraine urgently requires.

False Assurances and Mounting Threats

Politicians promised that such things wouldn’t happen. Previously, a government leader, promoting the biggest and most dangerous of all investment pacts, stated: “We’ve signed trade deal upon trade deal and there has not been a problem in the past.” A consultant on this issue accused campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear these lawsuits. Warnings that “once firms grasp the power they now possess, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That warning has come to pass. In the current period, energy and mining firms have filed a record number of cases against nations both wealthy and developing, contesting – like the example of the Whitehaven project – state efforts to halt climate breakdown. Corporations have so far won vast sums through ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP