Welcome, Overseas Oligarchs and Corporations! Please Come and Litigate Against the UK for Billions of Pounds.

Can you perceive our democratic process works? Perhaps something like this. The public votes for MPs. They vote on bills. If a majority is secured, the bills pass into law. Legislation is maintained by the courts. End of story. However, that’s how it once functioned. Those days are over.

The Emergence of Secret Courts

Nowadays, foreign corporations, along with the billionaires who own them, have the power to sue elected administrations for the laws they pass, at offshore tribunals staffed by business advocates. Such disputes take place away from public scrutiny. Unlike our courts, these bodies provide no right of appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, including companies based in this country. They are open exclusively to businesses based overseas.

When a secret court determines that a government measure might diminish the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

These sums constitute not actual losses but compensation the tribunal officials decide the company might otherwise have made. The administration may have to rescind the measure. It will be hesitant to enacting future policies in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of legal actions are being filed, as corporations observe each other, and hedge funds fund legal actions in return for a portion of the settlements. The result? Sovereignty and democracy are becoming unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the decisions enacted by parliaments is that this clause has been inserted – absent public approval, and often in a climate of total confidentiality – inside international trade agreements.

A Specific Example: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the high court. The presiding officer ruled that plans to excavate the first major coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the outgoing administration, which had endorsed the extraordinary assertion that the mine could have no impact on climate commitments. The incoming administration subsequently revoked the consent the previous administration had issued. Today, this legal outcome is under threat by an foreign court reporting to only the corporations petitioning it.

Last August, a company whose ultimate owners reside in the offshore financial centre lodged a claim challenging the UK government. The previous week a arbitration panel in Washington DC was set up to adjudicate on it.

The claimant is suing the UK for the revenue it might have made if the mine had been permitted to proceed. Citizens have no clear indication how much this sum represents. Who is representing it against the UK administration? An elected representative, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court upholds it, then a foreign company contests it through an secretive private court, and a elected official represents its behalf.

The Russian Challenge

On the same day that the court on the coal mine dispute was appointed, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case at present, but it is highly possible that he’ll use the tribunal to challenge the penalties the UK enacted against him after the war in Ukraine. He has already initiated proceedings against another European state on these grounds, claiming sixteen billion dollars: an amount representing half nation's yearly income. Part of the lawyers acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

Trade specialists contend that the EU’s procrastination in utilising seized oligarchs' funds as security for its financial support package stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This unprecedented, undemocratic power over sovereign states might be preventing the finance Ukraine critically depends on.

False Assurances and Escalating Threats

The public was told that these scenarios were not possible. Previously, a senior politician, promoting the most significant and hazardous of all investment pacts, declared: “Britain has agreed to trade deal after trade deal and there has never been a issue in the past.” An adviser on this matter accused critics of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “as corporations start to realise the authority they’ve been granted, they will shift their focus from the weak nations to the developed economies” were greeted by scepticism.

That threat has now materialised. In the current period, fossil fuel and resource corporations have initiated a unprecedented number of cases against nations both wealthy and developing, opposing – as in the case of the UK mine – official measures to halt climate breakdown. Corporations have so far won vast sums by using ISDS, of which oil majors have been awarded $84bn. That equates to the combined GDP