Welcome, International Oligarchs and Corporations! Please Come and Sue the UK for Vast Sums.

What is your understand our democratic process functions? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is achieved, the bills become law. Statutes is maintained by the courts. That's it. Well, that was how it operated in the past. No longer.

The Emergence of Secret Tribunals

In the modern era, international firms, along with the billionaires that control them, have the power to sue governments for the policies they pass, at secret arbitration panels made up of corporate lawyers. The cases take place away from public scrutiny. In contrast to domestic courts, these bodies provide no right of appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, including enterprises based in this country. Access is granted solely for corporations based overseas.

Should an arbitration panel rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant financial penalties of vast sums, running into billions.

These awards constitute not real financial harm but funds the panel members conclude the company might otherwise have made. The administration may have to abandon its policy. It becomes hesitant to enacting future policies along the same lines, for fear of being sued.

A System Running Rampant

Record numbers of legal actions are being filed, as corporations learn from each other, and investment funds fund legal actions in return for a share of the awards. The result? National sovereignty and democracy are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it can override national legislation and the decisions made by legislatures is that this provision has been inserted – without public consent, and often in a climate of total confidentiality – within international trade agreements.

A Concrete Instance: The Whitehaven Coalmine

Last year, a conservation group secured a significant win at the high court. The judge ruled that plans to excavate the first deep coalmine in the UK for a generation, in Cumbria, were unlawfully approved by the previous government, which had endorsed the bizarre claim that the mine could have no consequence on national carbon targets. The incoming administration later cancelled the licence the Tories had granted. Now, this victory is under threat by an foreign court reporting to only the corporations bringing the case.

Last August, a company whose final controllers reside in the offshore financial centre initiated proceedings challenging the UK government. Last week a dispute settlement body in the US capital was set up to consider the case.

The company is litigating against the UK for the profits it would have generated if the mine had been allowed to proceed. We have no idea how much this sum represents. What legal team is acting on its behalf challenging the state? A member of parliament, and ex-law officer in the outgoing administration, that great patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a international entity disputes it through an undemocratic arbitration panel, and a member of our parliament acts on its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coal mine dispute was established, information emerged 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 to date, but it is highly possible that he’ll use the arbitration process to contest the restrictions the UK levied against him subsequent to the Russian aggression. He has started suing another European state with similar intent, claiming a colossal sum: half that government’s annual revenue. Among the legal team on his side? a prominent lawyer, spouse of the former British prime minister.

Legal experts contend that the EU’s hesitation in leveraging immobilised Russian assets as collateral for its financial support package stems from Belgium’s fear that it could be sued in the ISDS tribunals, under a investment pact. This extraordinary, unaccountable authority over democratic administrations might be preventing the money Ukraine desperately needs.

Empty Promises and Growing Risks

We were assured that these events could not occur. In 2014, a government leader, championing the most significant and hazardous of all these agreements, declared: “We’ve signed investment treaty upon trade deal and we have never seen a problem in the past.” An adviser on this issue accused activists of “exaggeration … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries needed to fear ISDS claims. Cautionary notes that “as corporations start to realise the authority they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were greeted by widespread derision.

That prediction has now materialised. In the current period, energy and resource corporations have initiated a unprecedented number of claims against nations both wealthy and developing, contesting – as in the case of the UK mine – official measures to halt environmental catastrophe. Companies have to date won vast sums through ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP