Welcome, Overseas Magnates and Corporations! Kindly Proceed and Litigate Against the UK for Vast Sums.

What is your perceive our system of government operates? Perhaps similar to this. Citizens choose MPs. They legislate on bills. If a majority is obtained, the bills become law. The law are enforced by the courts. Simple as that. However, that’s how it operated in the past. Those days are over.

The Advent of Offshore Tribunals

Nowadays, international firms, or the billionaires who own them, have the power to sue elected administrations for the policies they pass, at offshore tribunals made up of corporate lawyers. Such disputes take place behind closed doors. Unlike our courts, these tribunals grant no right of appeal or legal review. You or I cannot take a case to them, nor can our government, including enterprises headquartered in this country. They are open exclusively to businesses registered abroad.

When a secret court rules that a law or policy could harm the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions, even billions.

This compensation are based not on tangible damages but funds the arbitrators conclude the company might otherwise have made. The administration could be forced to rescind the measure. It will be hesitant to enacting future policies in that area, worried about facing litigation.

A System Running Rampant

Unprecedented levels of legal actions are being initiated, as firms learn from each other, and hedge funds bankroll lawsuits for a share of a portion of the takings. The outcome? Sovereignty and popular rule are turning into prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the decisions taken by parliaments is that this stipulation has been inserted – without public consent, and often in conditions of total confidentiality – into trade treaties.

A Specific Example: The Cumbrian Coal Mine

A year ago, environmental campaigners won a great victory at the High Court. The presiding officer ruled that plans to excavate the first major coal mine in the UK for a generation, in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine could have no impact on national carbon targets. The new government subsequently revoked the licence the previous administration had issued. Today, this success faces being overturned by an foreign court answering to no one but the companies petitioning it.

During August, a corporate entity whose ultimate owners reside in the offshore financial centre filed a lawsuit against the UK government. Recently a dispute settlement body in the United States was established to consider the case.

The company is litigating against the UK for the profits it might have made if the mine had been permitted to proceed. We have little idea how much this might be. What legal team is acting on its behalf challenging the state? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot the MP. The government enacts a policy, the high court validates it, then a foreign company disputes it through an secretive arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Case

Concurrently that the court on the coalmine case was convened, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know scarce of the case so far, but it seems likely that he may employ the tribunal to contest the sanctions the UK imposed on him following the war in Ukraine. He has initiated proceedings against another European state with similar intent, claiming $16bn: half that state's annual revenue. Among the lawyers representing him there? a prominent lawyer, married to the former British prime minister.

Trade specialists believe that the EU’s procrastination in using frozen oligarchs' funds as security for its financial support package stems from Belgium’s fear that it could be sued in the secret arbitration panels, under a investment pact. This extraordinary, secretive influence over democratic administrations might be preventing the money Ukraine critically depends on.

Empty Promises and Mounting Risks

Politicians promised that these events were not possible. Years ago, a senior politician, promoting the largest and riskiest of all these agreements, stated: “The UK has signed trade agreement after trade deal and we have never seen a problem in the past.” A consultant on this topic labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that only poorer nations should be concerned by such legal actions. Warnings that “once firms grasp the power they’ve been granted, they will shift their focus from the poorer states to the developed economies” were dismissed with widespread derision.

That prediction has come to pass. This year, oil and gas and mining firms have lodged a unprecedented number of claims against nations both wealthy and developing, challenging – as in the case of the UK mine – state efforts to stop environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That equates to the combined GDP