Greetings, Foreign Oligarchs and Firms! Please Come and Sue the UK for Vast Sums.

How do you perceive our political system operates? It could be along the lines of this. We elect MPs. They legislate on bills. Should a majority is obtained, the bills become law. Statutes are enforced by the courts. That's it. Yet, that used to be how it used to work. No longer.

The Advent of Shadow Tribunals

Today, international firms, or the wealthy individuals who own them, have the power to sue governments for the laws they pass, at offshore tribunals staffed by business advocates. The cases are held in secret. Differing from national judiciaries, these bodies provide no avenue for appeal or legal review. The general public cannot take a case to them, just as our government, or even businesses operating from this country. They are open exclusively to corporations based overseas.

Should an arbitration panel finds that a law or policy may compromise the corporation’s anticipated profits, it can award compensation of vast sums, running into billions.

These awards constitute not tangible damages but funds the panel members determine the company might otherwise have made. The administration might be compelled to rescind the measure. It is hesitant to passing future laws in that area, worried about being sued.

A Mechanism Running Rampant

Historically high figures of legal actions are being initiated, as companies take cues from each other, and private equity fund legal actions for a share of a cut of the awards. The result? Sovereignty and popular rule are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the decisions made by parliaments is that this provision has been incorporated – absent public approval, and frequently under conditions of profound opacity – inside bilateral investment treaties.

A Real-World Case: The UK Coalmine

Last year, activists won a great victory at the High Court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had agreed to the questionable argument that the mine would have had no impact on our carbon budgets. The incoming administration subsequently revoked the consent the former government had granted. Today, this legal outcome could be compromised by an secret arbitration panel answering to no one but the companies petitioning it.

Last August, a company whose final controllers are located in the tax haven initiated proceedings challenging the UK government. Recently a dispute settlement body in the United States was convened to consider the case.

The claimant is litigating against the UK for the revenue it would have generated if the mine had been allowed to proceed. We have little idea how much this might be. What legal team is representing it in opposition to the UK administration? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot the MP. The government makes a decision, the high court upholds it, then a international entity contests it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the court on the coal mine dispute was established, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case at present, but it is highly possible that he may employ the arbitration process to contest the restrictions the UK levied against him after the war in Ukraine. He has filed a claim against another European state for this reason, seeking sixteen billion dollars: an amount representing half state's yearly budget. Part of the lawyers on his side? a prominent lawyer, wife of the former British prime minister.

Trade specialists believe that the EU’s hesitation in using frozen state funds as guarantee for its financial support package stems from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This unprecedented, secretive influence over democratic administrations could be blocking the money Ukraine critically depends on.

False Assurances and Mounting Threats

We were assured that such things were not possible. Years ago, a government leader, promoting the largest and riskiest of all such treaties, declared: “We’ve signed trade deal upon trade deal and there has never been a case in the past.” A consultant on this matter accused activists of “alarmism … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that exclusively weaker states needed to fear these lawsuits. Predictions that “as corporations start to realise the influence bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That threat has now materialised. Recently, fossil fuel and mining firms have filed a unprecedented number of cases against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – official measures to halt environmental catastrophe. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have been awarded the majority. That represents the combined GDP