Hello, Foreign Tycoons and Corporations! Please Come and Sue the UK for Billions of Pounds.

Can you perceive our democratic process operates? It could be something like this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills pass into law. Legislation are enforced by the courts. End of story. Well, that used to be how it operated in the past. No longer.

The Rise of Secret Tribunals

Today, international firms, along with the oligarchs that control them, have the power to sue nation states for the policies they pass, at secret arbitration panels made up of corporate lawyers. These proceedings take place in secret. Unlike our courts, these panels provide no right of appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, including companies based in this country. Access is granted exclusively to businesses based overseas.

When a secret court finds that a government measure may compromise the corporation’s expected profits, it can award compensation of hundreds of millions, running into billions.

This compensation represent not tangible damages but money the tribunal officials conclude the company might otherwise have made. The state may have to abandon its policy. It is hesitant to introducing similar legislation of a similar nature, worried about facing litigation.

A System Growing Exponentially

Unprecedented levels of disputes are being initiated, as companies observe each other, and hedge funds finance suits in return for a portion of the settlements. The outcome? Sovereignty and democracy are now unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the decisions made by parliaments is that this stipulation has been inserted – without public consent, and frequently under an atmosphere of total confidentiality – inside trade treaties.

A Concrete Instance: The Cumbrian Coal Mine

Twelve months ago, a conservation group won a great victory at the senior court. The judge determined that schemes to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on national carbon targets. The Labour government subsequently revoked the licence the Tories had granted. Now, this victory is under threat by an offshore tribunal accountable to only the companies filing the suit.

Last August, a corporate entity whose ultimate owners reside in the Cayman Islands filed a lawsuit challenging the UK government. Recently a arbitration panel in the US capital was set up to hear it.

The company is litigating against the UK for the revenue it could have earned if the mine had received permission to go ahead. The public has little idea how much this sum represents. Which individual is serving as its counsel against the UK administration? A member of parliament, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The administration makes a decision, the high court supports it, then a foreign company challenges it through an undemocratic private court, and a sitting MP works for its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. The public knows nothing of the case so far, but it seems likely that he’ll use the ISDS mechanism to contest the penalties the UK enacted against him after the Russian aggression. He has already filed a claim against another European state with similar intent, demanding sixteen billion dollars: an amount representing half government’s yearly budget. Included in the legal team acting for him in that case? Cherie Blair, spouse of the former British prime minister.

Trade specialists contend that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This extraordinary, undemocratic power over elected governments might be preventing the money Ukraine desperately needs.

Misleading Claims and Growing Threats

Politicians promised that these scenarios were not possible. Previously, a former prime minister, championing the biggest and most dangerous of all such treaties, told us: “The UK has signed investment treaty upon trade deal and we have never seen a problem in the past.” A consultant on this issue described activists of “exaggeration … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by such legal actions. Warnings that “once firms grasp the authority bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with scepticism.

That threat has now materialised. Recently, fossil fuel and mining firms have filed a unprecedented number of suits against nations rich and poor, challenging – as in the case of the UK mine – state efforts to halt climate breakdown. Firms have to date won vast sums via ISDS, of which oil majors have secured $84bn. That represents the combined GDP