Greetings, International Oligarchs and Companies! Please Come and Litigate Against the UK for Billions.

How do you reckon our system of government operates? Perhaps along the lines of this. We elect MPs. They legislate on bills. When a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. However, that was how it operated in the past. Those days are over.

The Emergence of Secret Arbitration Panels

Today, international firms, along with the oligarchs behind them, can sue governments for the regulations they pass, at offshore tribunals staffed by commercial attorneys. The cases are conducted behind closed doors. Differing from national judiciaries, these bodies allow no avenue for appeal or oversight by judges. You or I are barred from bringing a case to them, just as our government, or even enterprises based in this country. Access is granted exclusively to businesses registered abroad.

Should an arbitration panel determines that a legislative action could harm the corporation’s anticipated profits, it can award damages of hundreds of millions of pounds, potentially billions.

This compensation are based not on tangible damages but funds the tribunal officials conclude the company would perhaps have made. The state might be compelled to drop the legislation. It is deterred from introducing similar legislation along the same lines, worried about being sued.

A Mechanism Running Rampant

Historically high figures of disputes are being brought, as firms learn from each other, and private equity fund legal actions in exchange for a cut of the awards. The result? Democratic sovereignty and democratic governance are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can supersede domestic law and the rulings made by parliaments is that this provision has been incorporated – absent public approval, and frequently under an atmosphere of profound opacity – into international trade agreements.

A Concrete Instance: The Cumbrian Coalmine

Twelve months ago, activists won a great victory at the High Court. The presiding officer found that proposals to dig the first new deep coal mine in the UK for three decades, in northwest England, were found to be unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine could have no consequence on climate commitments. The Labour government later cancelled the licence the former government had granted. Currently, this legal outcome could be compromised by an offshore tribunal reporting to no one but the entities petitioning it.

In August, a corporate entity whose final controllers are based in the offshore financial centre lodged a claim challenging the UK government. The previous week a arbitration panel in the US capital was convened to consider the case.

The company is suing the UK for the revenue it could have earned if the mine had received permission to proceed. Citizens have no idea 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 Conservative government, that great patriot Sir Geoffrey Cox. The state makes a decision, the national judiciary validates it, then a overseas corporation contests it through an secretive private court, and a member of our parliament represents its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the coalmine case was established, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case so far, but it seems likely that he will utilise the arbitration process to fight the penalties the UK enacted against him subsequent to the Russian aggression. He has already started suing a small nation on these grounds, claiming $16bn: half that government’s annual revenue. Part of the legal team on his side? Cherie Blair, spouse of the former British prime minister.

Legal experts argue that the EU’s delay in utilising seized Russian assets as collateral for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations might be preventing the funds Ukraine desperately needs.

False Assurances and Escalating Costs

The public was told that such things could not occur. In 2014, a former prime minister, promoting the largest and riskiest of all these agreements, stated: “We’ve signed investment treaty after trade deal and there has never been a issue in the past.” An adviser on this topic described critics of “exaggeration … in reality, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear ISDS claims. Predictions that “once firms grasp the influence they now possess, they will shift their focus from the poorer states to the strong ones” were met with scepticism.

That threat has come to pass. Recently, fossil fuel and extraction companies have lodged a unprecedented number of cases against nations rich and poor, contesting – similar to the Cumbrian coalmine – official measures to prevent climate breakdown. Corporations have so far won $114bn via ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP