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

What is your reckon our democratic process functions? Maybe similar to this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills pass into law. Legislation are enforced by the courts. That's it. Yet, that’s how it used to work. No longer.

The Advent of Shadow Tribunals

Nowadays, international firms, and the wealthy individuals behind them, have the power to sue governments for the laws they pass, at secret arbitration panels staffed by commercial attorneys. Such disputes take place away from public scrutiny. Unlike our courts, these bodies provide no avenue for appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, or even companies headquartered in this country. They are open solely for corporations based overseas.

Should an arbitration panel rules that a legislative action might diminish the corporation’s projected profits, it has the power to grant financial penalties of vast sums, potentially billions.

These awards are based not on tangible damages but money the tribunal officials decide the company might otherwise have made. The government might be compelled to rescind the measure. It is hesitant to introducing similar legislation along the same lines, due to the risk of being sued.

A Mechanism Running Rampant

Historically high figures of cases are being brought, as firms take cues from each other, and hedge funds bankroll lawsuits for a share of a cut of the settlements. The result? Sovereignty and democratic governance are turning into prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump domestic law and the rulings made by elected bodies is that this stipulation has been inserted – absent public approval, and often in an atmosphere of profound opacity – within international trade agreements.

A Concrete Instance: The Whitehaven Coalmine

Twelve months ago, activists achieved a major legal triumph at the high court. The judge ruled that proposals to dig the first deep coalmine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine would have had no consequence on national carbon targets. The new government then withdrew the permission the previous administration had granted. Today, this success faces being overturned by an offshore tribunal answering to no one but the entities bringing the case.

Last August, a company whose final controllers reside in the Cayman Islands filed a lawsuit challenging the UK government. Last week a tribunal in Washington DC was convened to hear it.

The company is seeking compensation from the UK for the money it could have earned if the mine had been permitted to go ahead. Citizens have no clear indication how much this could amount to. What legal team is representing it challenging the state? A sitting MP, and ex-law officer in the outgoing administration, that great patriot Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a foreign company challenges it through an unaccountable offshore tribunal, and a elected official works for its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. Details are nothing of the case to date, but it is highly possible that he’ll use the tribunal to challenge the sanctions the UK enacted against him after the Russian aggression. He has filed a claim against Luxembourg with similar intent, seeking a colossal sum: half that government’s yearly income. Part of the legal team representing him there? the wife of a former prime minister, married to the former British prime minister.

International law scholars believe that the EU’s delay in utilising seized oligarchs' funds as guarantee for its financial support package arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states might be preventing the money Ukraine urgently requires.

False Assurances and Escalating Threats

The public was told that these events were not possible. In 2014, a former prime minister, promoting the biggest and most dangerous of all such treaties, declared: “The UK has signed trade deal upon trade deal and there has not been a problem in the past.” A consultant on this matter accused activists of “exaggeration … the fact is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about such legal actions. Predictions that “as corporations start to realise the power they now possess, they will redirect their efforts from the vulnerable countries to the strong ones” were dismissed with general mockery.

That prediction has now materialised. In the current period, energy and mining firms have lodged a record number of suits against nations rich and poor, challenging – like the example of the Cumbrian coalmine – official measures to stop global warming. Corporations have to date won vast sums through ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP