Welcome, International Oligarchs and Firms! Kindly Come and Litigate Against the UK for Billions.

Can you understand our democratic process functions? Perhaps similar to this. The public votes for MPs. They legislate on bills. When a majority is secured, the bills are enacted as law. The law is maintained by the courts. End of story. Yet, that was how it used to work. No longer.

The Rise of Shadow Tribunals

In the modern era, foreign corporations, or the billionaires behind them, are able to litigate against governments for the policies they pass, at secret arbitration panels staffed by commercial attorneys. The cases are conducted in secret. Differing from national judiciaries, these tribunals allow no opportunity to appeal or judicial review. You or I are unable to file a case to them, nor can our government, including companies operating from this country. They are open only to entities based overseas.

Should an arbitration panel determines that a government measure may compromise the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions, running into billions.

These sums constitute not real financial harm but money the tribunal officials determine the company would perhaps have made. The state might be compelled to drop the legislation. It becomes deterred from introducing similar legislation along the same lines, for fear of facing litigation.

A Process Running Rampant

Historically high figures of disputes are being initiated, as companies learn from each other, and investment funds bankroll lawsuits in exchange for a portion of the takings. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the rulings taken by parliaments is that this clause has been incorporated – absent public approval, and frequently under conditions of extreme secrecy – into trade treaties.

A Real-World Case: The UK Coal Mine

Twelve months ago, a conservation group won a great victory at the High Court. The presiding officer found that plans to excavate the first major coal mine in the UK for 30 years, in northwest England, were illegally sanctioned by the previous government, which had endorsed the bizarre claim that the mine would have zero effect on national carbon targets. The Labour government subsequently revoked the permission the Tories had granted. Today, this legal outcome faces being overturned by an secret arbitration panel answering to no one but the companies petitioning it.

Last August, a firm whose final controllers are based in the tax haven initiated proceedings challenging the UK government. Recently a tribunal in the United States was convened to hear it.

The claimant is suing the UK for the profits it would have generated if the mine had received permission to commence operations. We have no idea how much this could amount to. Which individual is representing it against the state? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government enacts a policy, the domestic court upholds it, then a foreign company challenges it through an unaccountable offshore tribunal, and a sitting MP works for its behalf.

A Sanctions Challenge

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. Details are nothing of the case at present, but it seems likely that he will utilise the tribunal to challenge the sanctions the UK enacted against him after the war in Ukraine. He has filed a claim against another European state on these grounds, seeking sixteen billion dollars: equivalent to half of nation's annual revenue. Included in the legal team on his side? a prominent lawyer, married to the previous PM.

Trade specialists believe that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its loan to Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

False Assurances and Growing Threats

The public was told that such things were not possible. Years ago, a senior politician, championing the most significant and hazardous of all such treaties, declared: “Britain has agreed to investment treaty after trade deal and there has never been a problem in the past.” A consultant on this issue described campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that only poorer nations needed to fear ISDS claims. Predictions that “when companies grasp the power they’ve been granted, they will redirect their efforts from the poorer states to the wealthy nations” were greeted by general mockery.

That prediction has now materialised. In the current period, oil and gas and extraction companies have lodged a unprecedented number of claims against nations across the economic spectrum, opposing – similar to the Cumbrian coalmine – official measures to stop global warming. Corporations have to date won vast sums through ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP