Greetings, Overseas Oligarchs and Firms! Please Come and Take Legal Action Against the UK for Billions.

Can you perceive our system of government functions? Perhaps similar to this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. The law is upheld by the courts. That's it. Well, that’s how it operated in the past. No longer.

The Rise of Secret Tribunals

In the modern era, international firms, or the billionaires that control them, can sue elected administrations for the laws they pass, at private courts made up of business advocates. Such disputes are held in secret. In contrast to domestic courts, these bodies provide no avenue for appeal or judicial review. You or I are unable to file a case to them, just as our government, including enterprises based in this country. The door is open only to entities operating from foreign soil.

If a tribunal rules that a government measure might diminish the corporation’s expected profits, it may order damages of hundreds of millions of pounds, even billions.

These sums constitute not tangible damages but money the tribunal officials conclude the company would perhaps have made. The government could be forced to drop the legislation. It will be discouraged from introducing similar legislation of a similar nature, for fear of being sued.

A Mechanism Running Rampant

Record numbers of cases are being filed, as corporations observe each other, and hedge funds fund legal actions in return for a portion of the settlements. The consequence? Sovereignty and democratic governance are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the decisions enacted by parliaments is that this stipulation has been inserted – absent public approval, and often in conditions of extreme secrecy – within international trade agreements.

A Concrete Example: The UK Coalmine

A year ago, a conservation group secured a significant win at the High Court. The justice determined that proposals to open the first new deep coal mine in the UK for 30 years, in Cumbria, were illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine could have no consequence on climate commitments. The Labour government later cancelled the permission the previous administration had issued. Now, this victory could be compromised by an foreign court answering to only the corporations petitioning it.

In August, a company whose beneficial owners reside in the offshore financial centre initiated proceedings challenging the UK government. Last week a tribunal in the US capital was convened to hear it.

This firm is litigating against the UK for the profits it might have made if the mine had been allowed to commence operations. Citizens have little idea how much this sum represents. Which individual is acting on its behalf challenging the state? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The government passes a law, the domestic court validates it, then a international entity contests it through an secretive private court, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

On the same day that the panel on the coal mine dispute was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows scarce of the case to date, but it appears probable that he may employ the ISDS mechanism to challenge the sanctions the UK enacted against him subsequent to the war in Ukraine. He has filed a claim against another European state on these grounds, claiming $16bn: half that nation's yearly budget. Part of the legal team on his side? Cherie Blair, married to the ex-UK leader.

Legal experts contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its financial support package is due to concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This extraordinary, secretive influence over democratic administrations could be blocking the money Ukraine critically depends on.

False Assurances and Growing Costs

The public was told that these scenarios wouldn’t happen. Previously, a former prime minister, advocating for the most significant and hazardous of all investment pacts, declared: “We’ve signed trade deal upon trade deal and there has never been a case in the past.” A consultant on this issue accused activists of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations had to worry about such legal actions. Warnings that “once firms grasp the authority they’ve been granted, they will redirect their efforts from the poorer states to the developed economies” were dismissed with widespread derision.

That warning is now a reality. Recently, oil and gas and mining firms have filed a record number of cases against nations across the economic spectrum, challenging – similar to the UK mine – official measures to halt environmental catastrophe. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP