Greetings, International Magnates and Firms! Kindly Come and Sue the UK for Billions of Pounds.

What is your reckon our system of government functions? It could be something like this. The public votes for MPs. They vote on bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. Simple as that. Well, that’s how it once functioned. Those days are over.

The Rise of Offshore Tribunals

Nowadays, foreign corporations, and the billionaires who own them, have the power to sue nation states for the policies they pass, at secret arbitration panels made up of business advocates. Such disputes are held away from public scrutiny. Unlike our courts, these tribunals provide no right of appeal or judicial review. The general public are barred from bringing a case to them, nor can our government, or even companies headquartered in this country. The door is open solely for corporations registered abroad.

When a secret court rules that a legislative action may compromise the corporation’s anticipated profits, it can award financial penalties of vast sums, potentially billions.

These sums are based not on real financial harm but money the tribunal officials determine the company would perhaps have made. The government may have to drop the legislation. It will be discouraged from introducing similar legislation along the same lines, for fear of being sued.

A Process Spiralling Out of Control

Record numbers of cases are being initiated, as companies observe each other, and hedge funds fund legal actions for a share of a share of the settlements. The outcome? Democratic sovereignty and democratic governance are turning into too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to override a country's own laws and the choices taken by elected bodies is that this clause has been inserted – absent public approval, and often in an atmosphere of profound opacity – into international trade agreements.

A Concrete Instance: The Whitehaven Coalmine

A year ago, a conservation group secured a significant win at the High Court. The justice determined that proposals to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have had no impact on climate commitments. The Labour government then withdrew the consent the former government had issued. Now, this legal outcome is under threat by an foreign court answering to exclusively the companies petitioning it.

In August, a corporate entity whose ultimate owners are located in the tax haven initiated proceedings challenging the UK government. Recently a tribunal in the US capital was established to adjudicate on it.

The company is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. The public has no idea how much this sum represents. What legal team is serving as its counsel challenging the British government? An elected representative, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The state makes a decision, the domestic court validates it, then a overseas corporation contests it through an secretive offshore tribunal, and a elected official represents its behalf.

The Russian Lawsuit

Concurrently that the panel on the coalmine case was established, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case at present, but it seems likely that he will utilise the tribunal to challenge the penalties the UK levied against him following the war in Ukraine. He has previously started suing a small nation on these grounds, seeking a colossal sum: half that government’s yearly income. Among the lawyers acting for him in that case? a prominent lawyer, married to the ex-UK leader.

International law scholars argue that the EU’s delay in using frozen oligarchs' funds as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over democratic administrations might be preventing the finance Ukraine desperately needs.

False Assurances and Growing Risks

The public was told that such things wouldn’t happen. In 2014, a senior politician, championing the biggest and most dangerous of all these agreements, told us: “We’ve signed trade deal after trade deal and we have never seen a issue in the past.” An expert on this matter described activists of “scaremongering … in reality, ISDS does not affect the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by ISDS claims. Predictions that “as corporations start to realise the authority bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were met with widespread derision.

That warning has come to pass. This year, energy and resource corporations have lodged a record number of claims against nations rich and poor, opposing – as in the case of the Whitehaven project – official measures to stop environmental catastrophe. Companies have to date won vast sums by using ISDS, of which energy giants have been awarded the majority. That equates to the combined GDP