Greetings, Overseas Tycoons and Corporations! Please Proceed and Take Legal Action Against the UK for Billions of Pounds.

What is your reckon our political system works? Perhaps similar to this. We elect MPs. They debate and pass bills. If a majority is secured, the bills become law. The law are enforced by the courts. That's it. However, that’s how it operated in the past. No longer.

The Emergence of Shadow Arbitration Panels

Nowadays, overseas companies, along with the oligarchs that control them, can sue governments for the laws they pass, at offshore tribunals composed of commercial attorneys. The cases are held away from public scrutiny. Unlike our courts, these panels allow no right of appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, or even enterprises operating from this country. The door is open solely for entities operating from foreign soil.

When a secret court determines that a government measure could harm the corporation’s projected profits, it may order financial penalties of vast sums, potentially billions.

These awards constitute not actual losses but funds the panel members determine the company could potentially have made. The state may have to rescind the measure. It is discouraged from enacting future policies of a similar nature, for fear of being sued.

A Process Running Rampant

Record numbers of legal actions are being filed, as companies take cues from each other, and private equity fund legal actions in exchange for a share of the settlements. The consequence? Democratic sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the decisions enacted by elected bodies is that this stipulation has been written – absent public approval, and often in conditions of extreme secrecy – within bilateral investment treaties.

A Real-World Example: The Whitehaven Coalmine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The judge determined that schemes to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had endorsed the extraordinary assertion that the mine would have had no consequence on our carbon budgets. The new government later cancelled the consent the previous administration had approved. Currently, this success could be compromised by an offshore tribunal accountable to exclusively the entities bringing the case.

During August, a company whose final controllers are located in the offshore financial centre initiated proceedings challenging the UK government. Last week a arbitration panel in Washington DC was convened to adjudicate on it.

This firm is suing the UK for the money it could have earned if the mine had been allowed to go ahead. We have little idea how much this might be. Who is representing it challenging the British government? A sitting MP, and ex-law officer in the Conservative government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court validates it, then a international entity challenges it through an undemocratic private court, and a member of our parliament works for its behalf.

The Russian Case

Simultaneously that the tribunal on the coalmine case was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. Details are little of the case so far, but it is highly possible that he will utilise the tribunal to challenge the restrictions the UK enacted against him subsequent to the Russian aggression. He has previously filed a claim against another European state for this reason, claiming a colossal sum: an amount representing half state's yearly income. Among the lawyers representing him there? a prominent lawyer, spouse of the former British prime minister.

Legal experts believe that the EU’s delay in using frozen Russian assets as guarantee for its financial support package stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, undemocratic power over sovereign states might be preventing the finance Ukraine critically depends on.

Empty Promises and Growing Threats

We were assured that these events could not occur. In 2014, a senior politician, promoting the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this topic described activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries should be concerned by ISDS claims. Cautionary notes that “as corporations begin to understand the influence they now possess, they will turn their attention from the poorer states to the strong ones” were greeted by general mockery.

That prediction has come to pass. In the current period, energy and resource corporations have filed a unprecedented number of cases against nations both wealthy and developing, challenging – as in the case of the Cumbrian coalmine – state efforts to prevent climate breakdown. Firms have to date won vast sums through ISDS, of which fossil fuel companies have obtained the majority. That is equivalent to the combined GDP