Hello, Overseas Tycoons and Companies! Kindly Proceed and Sue the UK for Billions of Pounds.

How do you reckon our system of government functions? It could be along the lines of this. We elect MPs. They debate and pass bills. When a majority is secured, the bills become law. Legislation is maintained by the courts. End of story. Well, that’s how it operated in the past. Those days are over.

The Emergence of Shadow Tribunals

Today, foreign corporations, and the oligarchs behind them, are able to litigate against nation states for the laws they pass, at private courts made up of business advocates. These proceedings are held away from public scrutiny. Unlike our courts, these panels grant no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, just as our government, including companies headquartered in this country. Access is granted exclusively to entities operating from foreign soil.

If a tribunal rules that a legislative action might diminish the corporation’s expected profits, it has the power to grant compensation of hundreds of millions of pounds, running into billions.

This compensation represent not tangible damages but funds the panel members determine the company could potentially have made. The administration might be compelled to rescind the measure. It becomes discouraged from introducing similar legislation of a similar nature, due to the risk of facing litigation.

A System Running Rampant

Historically high figures of cases are being initiated, as corporations learn from each other, and investment funds fund legal actions for a share of a share of the awards. The result? Democratic sovereignty and popular rule are becoming too costly.

The system is called “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the choices taken by elected bodies is that this clause has been inserted – absent public approval, and frequently under conditions of extreme secrecy – into bilateral investment treaties.

A Specific Instance: The Whitehaven Coal Mine

Last year, a conservation group secured a significant win at the High Court. The justice found that proposals to dig the first new deep coal mine in the UK for three decades, in Cumbria, were found to be wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine could have zero effect on national carbon targets. The new government later cancelled the consent the former government had granted. Currently, this success faces being overturned by an secret arbitration panel accountable to exclusively the companies petitioning it.

In August, a company whose ultimate owners reside in the tax haven initiated proceedings versus the UK government. Recently a arbitration panel in the United States was set up to adjudicate on it.

The company is suing the UK for the revenue it would have generated if the mine had been permitted to proceed. We have no clear indication how much this could amount to. Who is acting on its behalf against the UK administration? An elected representative, and former attorney-general in the outgoing administration, the noted patriot the MP. The government makes a decision, the national judiciary upholds it, then a international entity challenges it through an secretive arbitration panel, and a elected official represents its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coalmine case was appointed, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. Details are nothing of the case so far, but it is highly possible that he may employ the ISDS mechanism to fight the penalties the UK enacted against him following the invasion of Ukraine. He has already filed a claim against a small nation for this reason, seeking a colossal sum: an amount representing half government’s yearly income. Among the counsel on his side? Cherie Blair, spouse of the former British prime minister.

Legal experts believe that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its financial support package stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states may be obstructing the money Ukraine urgently requires.

False Assurances and Growing Threats

Politicians promised that these events could not occur. Years ago, a government leader, advocating for the largest and riskiest of all these agreements, told us: “Britain has agreed to investment treaty after trade deal and there has not been a problem in the past.” An expert on this issue accused campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states needed to fear ISDS claims. Predictions that “when companies start to realise the influence bestowed upon them, they will turn their attention from the weak nations to the wealthy nations” were met with widespread derision.

That threat has come to pass. Recently, energy and extraction companies have initiated a historic level of claims against nations across the economic spectrum, contesting – as in the case of the UK mine – government attempts to stop environmental catastrophe. Companies have so far won $114bn via ISDS, of which fossil fuel companies have been awarded $84bn. That represents the combined GDP