Hello, Foreign Oligarchs and Corporations! Kindly Proceed and Take Legal Action Against the UK for Billions of Pounds.

What is your reckon our political system operates? Perhaps along the lines of this. The public votes for MPs. They vote on bills. When a majority is secured, the bills are enacted as law. The law is maintained by the courts. Simple as that. Well, that was how it used to work. Those days are over.

The Rise of Secret Tribunals

In the modern era, foreign corporations, or the oligarchs who own them, can sue governments for the regulations they pass, at secret arbitration panels made up of corporate lawyers. These proceedings take place behind closed doors. In contrast to domestic courts, these panels provide no opportunity to appeal or judicial review. The general public cannot take a case to them, and neither can our government, or even companies operating from this country. They are open solely for entities registered abroad.

When a secret court rules that a legislative action could harm the corporation’s expected profits, it can award financial penalties of vast sums, running into billions.

These awards are based not on actual losses but compensation the panel members determine the company would perhaps have made. The government might be compelled to drop the legislation. It becomes deterred from introducing similar legislation in that area, worried about incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of disputes are being filed, as companies observe each other, and private equity bankroll lawsuits in exchange for a portion of the awards. The outcome? Democratic sovereignty and democratic governance are becoming too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the rulings taken by elected bodies is that this clause has been inserted – without democratic mandate, and typically amid an atmosphere of total confidentiality – within international trade agreements.

A Concrete Case: The Whitehaven Coal Mine

Last year, activists secured a significant win at the High Court. The justice determined that proposals to dig the first new deep coal mine in the UK for three decades, in Cumbria, had been wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have had no consequence on climate commitments. The new government subsequently revoked the permission the previous administration had granted. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to no one but the companies petitioning it.

Last August, a corporate entity whose beneficial owners are based in the tax haven filed a lawsuit challenging the UK government. Recently a tribunal in Washington DC was established to adjudicate on it.

The company is litigating against the UK for the profits it might have made if the mine had received permission to commence operations. Citizens have little idea how much this sum represents. Which individual is acting on its behalf against the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot the MP. The administration passes a law, the domestic court supports it, then a overseas corporation disputes it through an secretive private court, and a member of our parliament works for its behalf.

A Sanctions Case

On the same day that the court on the mining lawsuit was appointed, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are little of the case so far, but it is highly possible that he’ll use the ISDS mechanism to challenge the sanctions the UK levied against him after the war in Ukraine. He has previously initiated proceedings against a small nation on these grounds, seeking sixteen billion dollars: equivalent to half of nation's yearly income. Part of the lawyers on his side? Cherie Blair, married to the ex-UK leader.

International law scholars contend that the EU’s delay in utilising seized oligarchs' funds as collateral for its financial support package arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, undemocratic power over elected governments could be blocking the money Ukraine urgently requires.

False Assurances and Mounting Threats

The public was told that these events were not possible. Previously, a former prime minister, promoting the most significant and hazardous of all these agreements, declared: “We’ve signed investment treaty upon trade deal and there has not been a case in the past.” A consultant on this issue accused activists of “scaremongering … in reality, 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. Warnings that “as corporations grasp the power they’ve been granted, they will redirect their efforts from the poorer states to the wealthy nations” were met with general mockery.

That prediction is now a reality. This year, fossil fuel and mining firms have lodged a unprecedented number of claims against nations both wealthy and developing, opposing – like the example of the Whitehaven project – state efforts to prevent climate breakdown. Corporations have to date won vast sums through ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That equates to the combined GDP