Hello, International Magnates and Corporations! Kindly Come and Sue the UK for Vast Sums.

What is your reckon our democratic process functions? Maybe similar to this. The public votes for MPs. They debate and pass bills. If a majority is obtained, the bills become law. Legislation is upheld by the courts. That's it. Well, that used to be how it used to work. Those days are over.

The Advent of Shadow Tribunals

Nowadays, foreign corporations, and the billionaires behind them, have the power to sue elected administrations for the regulations they pass, at private courts composed of commercial attorneys. Such disputes are held behind closed doors. Unlike our courts, these panels provide no opportunity to appeal or legal review. Ordinary citizens are barred from bringing a case to them, and neither can our government, including companies headquartered in this country. Access is granted solely for corporations based overseas.

When a secret court determines that a legislative action might diminish the corporation’s projected profits, it may order damages of vast sums, running into billions.

These awards are based not on tangible damages but funds the tribunal officials conclude the company might otherwise have made. The administration might be compelled to abandon its policy. It is discouraged from enacting future policies of a similar nature, due to the risk of being sued.

A Mechanism Running Rampant

Historically high figures of legal actions are being initiated, as firms take cues from each other, and hedge funds fund legal actions in exchange for a cut of the takings. The result? Democratic sovereignty and democratic governance are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override a country's own laws and the decisions taken by legislatures is that this provision has been written – without democratic mandate, and often in an atmosphere of total confidentiality – inside bilateral investment treaties.

A Real-World Example: The Whitehaven Coal Mine

Last year, a conservation group won a great victory at the senior court. The judge determined that proposals to dig the first new deep coal mine in the UK for three decades, in Cumbria, were unlawfully approved by the Conservative government, which had endorsed the bizarre claim that the mine would have no impact on climate commitments. The new government later cancelled the licence the former government had granted. Today, this success faces being overturned by an secret arbitration panel accountable to only the entities bringing the case.

Last August, a corporate entity whose beneficial owners are located in the Cayman Islands filed a lawsuit against the UK government. Last week a tribunal in the United States was set up to hear it.

The company is suing the UK for the revenue it could have earned if the mine had received permission to go ahead. We have little idea how much this could amount to. Which individual is acting on its behalf in opposition to the UK administration? A member of parliament, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The state enacts a policy, the domestic court validates it, then a foreign company contests it through an undemocratic private court, and a elected official represents its behalf.

An Oligarch's Challenge

Simultaneously that the court 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 oligarch, Mikhail Fridman. Details are little of the case so far, but it appears probable that he will utilise the arbitration process to challenge the penalties the UK levied against him subsequent to the war in Ukraine. He has already started suing another European state on these grounds, claiming $16bn: half that government’s yearly budget. Included in the counsel representing him there? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts contend that the EU’s hesitation in using frozen Russian assets as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments could be blocking the finance Ukraine desperately needs.

Misleading Claims and Growing Threats

The public was told that such things wouldn’t happen. Previously, a senior politician, championing the biggest and most dangerous of all investment pacts, told us: “The UK has signed trade agreement upon trade deal and there has never been a problem in the past.” A consultant on this matter described critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The overall message appeared to be that only poorer nations needed to fear such legal actions. Cautionary notes that “once firms start to realise the authority they now possess, they will turn their attention from the poorer states to the developed economies” were greeted by widespread derision.

That warning is now a reality. In the current period, energy and resource corporations have lodged a historic level of claims against nations across the economic spectrum, contesting – similar to the Whitehaven project – official measures to halt global warming. Firms have thus far won $114bn through ISDS, of which oil majors have obtained eighty-four billion dollars. That is equivalent to the combined GDP