Welcome, International Oligarchs and Corporations! Kindly Proceed and Sue the UK for Billions of Pounds.

How do you reckon our system of government works? It could be something like this. We elect MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. The law are enforced by the courts. Simple as that. Well, that used to be how it operated in the past. Those days are over.

The Emergence of Shadow Arbitration Panels

Nowadays, international firms, or the billionaires who own them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels made up of corporate lawyers. Such disputes are conducted away from public scrutiny. In contrast to domestic courts, these tribunals grant no avenue for appeal or oversight by judges. The general public cannot take a case to them, just as our government, or even companies based in this country. Access is granted exclusively to entities operating from foreign soil.

When a secret court rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant financial penalties of vast sums, running into billions.

These sums constitute not actual losses but money the tribunal officials conclude the company might otherwise have made. The administration could be forced to drop the legislation. It is deterred from introducing similar legislation of a similar nature, for fear of facing litigation.

A Process Running Rampant

Record numbers of cases are being initiated, as companies observe each other, and hedge funds finance suits in exchange for a share of the settlements. The outcome? Democratic sovereignty and popular rule are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the choices enacted by elected bodies is that this provision has been written – without public consent, and frequently under a climate of profound opacity – within bilateral investment treaties.

A Real-World Instance: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners won a great victory at the high court. The justice ruled that plans to excavate the first deep coalmine in the UK for 30 years, in northwest England, were unlawfully approved by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no consequence on climate commitments. The incoming administration subsequently revoked the consent the former government had issued. Today, this legal outcome is under threat by an secret arbitration panel answering to exclusively the corporations petitioning it.

During August, a firm whose ultimate owners are located in the tax haven filed a lawsuit against the UK government. Last week a arbitration panel in the United States was set up to consider the case.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to proceed. Citizens have no idea how much this sum represents. Who is acting on its behalf against the state? A sitting MP, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The administration passes a law, the high court supports it, then a international entity challenges it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

The Russian Challenge

Concurrently that the panel on the coal mine dispute was established, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case to date, but it is highly possible that he will utilise the arbitration process to challenge the sanctions the UK imposed on him following the invasion of Ukraine. He has already filed a claim against Luxembourg with similar intent, seeking sixteen billion dollars: half that government’s yearly budget. Among the counsel on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s procrastination in utilising seized state funds as collateral for its loan to Ukraine is due to 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 could be blocking the finance Ukraine urgently requires.

False Assurances and Escalating Threats

Politicians promised that such things could not occur. In 2014, a government leader, championing the most significant and hazardous of all these agreements, told us: “The UK has signed trade deal after trade deal and we have never seen a issue in the past.” An adviser on this topic labelled campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations should be concerned by ISDS claims. Predictions that “once firms start to realise the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were dismissed with scepticism.

That warning has come to pass. In the current period, oil and gas and resource corporations have lodged a historic level of cases against nations both wealthy and developing, challenging – similar to the UK mine – state efforts to halt global warming. Corporations have to date won $114bn through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That equates to the combined GDP