Welcome, Overseas Tycoons and Companies! Kindly Proceed and Litigate Against the UK for Vast Sums.

Can you perceive our democratic process functions? Maybe similar to this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills become law. Statutes are enforced by the courts. Simple as that. Well, that was how it operated in the past. Those days are over.

The Emergence of Secret Courts

Nowadays, foreign corporations, and the billionaires who own them, are able to litigate against governments for the laws they pass, at private courts made up of commercial attorneys. These proceedings are held behind closed doors. Differing from national judiciaries, these panels grant no opportunity to appeal or legal review. The general public are barred from bringing a case to them, nor can our government, including businesses headquartered in this country. Access is granted solely for corporations based overseas.

Should an arbitration panel rules that a legislative action might diminish the corporation’s expected profits, it may order damages of vast sums, even billions.

These awards represent not actual losses but money the arbitrators decide the company would perhaps have made. The administration might be compelled to rescind the measure. It will be hesitant to introducing similar legislation in that area, for fear of facing litigation.

A Process Running Rampant

Record numbers of legal actions are being filed, as firms take cues from each other, and investment funds fund legal actions in return for a share of the awards. The outcome? Democratic sovereignty and democratic governance are turning into unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can trump a country's own laws and the decisions taken by legislatures is that this clause has been incorporated – without democratic mandate, and frequently under an atmosphere of total confidentiality – within international trade agreements.

A Specific Instance: The UK Coal Mine

A year ago, environmental campaigners achieved a major legal triumph at the senior court. The judge determined that schemes to open the first new deep coal mine in the UK for 30 years, in Cumbria, had been illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine would have had zero effect on climate commitments. The new government later cancelled the consent the previous administration had granted. Now, this victory could be compromised by an secret arbitration panel accountable to only the companies filing the suit.

In August, a company whose ultimate owners reside in the tax haven initiated proceedings against the UK government. The previous week a arbitration panel in Washington DC was convened to adjudicate on it.

This firm is litigating against the UK for the revenue it might have made if the mine had been allowed to go ahead. Citizens have no idea how much this could amount to. What legal team is representing it challenging the UK administration? A sitting MP, and ex-law officer in the Conservative government, the noted patriot the MP. The government passes a law, the national judiciary supports it, then a overseas corporation challenges it through an undemocratic private court, and a elected official represents its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know scarce of the case so far, but it appears probable that he may employ the ISDS mechanism to challenge the restrictions the UK imposed on him after the war in Ukraine. He has previously filed a claim against Luxembourg with similar intent, demanding sixteen billion dollars: half that nation's annual revenue. Included in the legal team representing him there? Cherie Blair, wife of the previous PM.

Trade specialists believe that the EU’s delay in leveraging immobilised state funds as security for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, unaccountable authority over elected governments may be obstructing the finance Ukraine critically depends on.

False Assurances and Mounting Costs

We were assured that such things were not possible. Previously, a former prime minister, championing the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade deal upon trade deal and we have never seen a case in the past.” A consultant on this topic described campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations had to worry about such legal actions. Predictions that “as corporations grasp the power bestowed upon them, they will turn their attention from the weak nations to the developed economies” were dismissed with general mockery.

That prediction has now materialised. This year, oil and gas and resource corporations have filed a record number of claims against nations both wealthy and developing, contesting – as in the case of the Whitehaven project – government attempts to prevent environmental catastrophe. Corporations have to date won vast sums via ISDS, of which fossil fuel companies have been awarded the majority. That represents the combined GDP