Hello, Overseas Oligarchs and Companies! Kindly Come and Litigate Against the UK for Vast Sums.

How do you perceive our democratic process operates? Perhaps something like this. We elect MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. End of story. Well, that was how it operated in the past. No longer.

The Emergence of Secret Tribunals

Today, international firms, and the wealthy individuals who own them, are able to litigate against elected administrations for the policies they pass, at private courts staffed by business advocates. These proceedings are conducted in secret. Unlike our courts, these bodies allow no right of appeal or oversight by judges. Ordinary citizens are unable to file a case to them, just as our government, or even businesses headquartered in this country. They are open only to corporations operating from foreign soil.

When a secret court determines that a government measure might diminish the corporation’s projected profits, it may order damages of hundreds of millions, potentially billions.

This compensation represent not tangible damages but money the arbitrators decide the company would perhaps have made. The administration may have to rescind the measure. It becomes deterred from enacting future policies along the same lines, worried about being sued.

A Process Growing Exponentially

Record numbers of disputes are being brought, as firms learn from each other, and hedge funds finance suits in exchange for a cut of the takings. The outcome? National sovereignty and popular rule are becoming too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can override national legislation and the decisions made by parliaments is that this provision has been inserted – without public consent, and often in conditions of profound opacity – into bilateral investment treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, activists won a great victory at the High Court. The justice determined that proposals to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had agreed to the bizarre claim that the mine could have no consequence on our carbon budgets. The Labour government later cancelled the consent the previous administration had issued. Now, this success could be compromised by an secret arbitration panel accountable to no one but the entities filing the suit.

In August, a firm whose final controllers are based in the offshore financial centre initiated proceedings challenging the UK government. Recently a tribunal in Washington DC was convened to adjudicate on it.

The claimant is litigating against the UK for the profits it would have generated if the mine had received permission to commence operations. The public has no clear indication how much this might be. What legal team is serving as its counsel against the British government? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court upholds it, then a foreign company disputes it through an undemocratic arbitration panel, and a elected official represents its behalf.

The Russian Case

Concurrently that the tribunal on the coalmine case was convened, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. The public knows scarce of the case at present, but it is highly possible that he will utilise the arbitration process to challenge the restrictions the UK imposed on him subsequent to the Russian aggression. He has initiated proceedings against Luxembourg on these grounds, seeking a colossal sum: equivalent to half of government’s yearly income. Part of the legal team acting for him in that case? Cherie Blair, wife of the former British prime minister.

Trade specialists believe that the EU’s procrastination in leveraging immobilised oligarchs' funds as security for its loan to Ukraine arises from concerns within Belgium that it could be sued in the secret arbitration panels, under a investment pact. This remarkable, undemocratic power over sovereign states may be obstructing the money Ukraine critically depends on.

False Assurances and Growing Costs

Politicians promised that these events wouldn’t happen. In 2014, a former prime minister, championing the most significant and hazardous of all investment pacts, told us: “Britain has agreed to investment treaty upon trade deal and there has never been a issue in the past.” An adviser on this matter described critics of “exaggeration … the fact is, ISDS barely touches the UK much”. The overall message was crafted to be that exclusively weaker states had to worry about ISDS claims. Warnings that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the vulnerable countries to the developed economies” were met with scepticism.

That prediction has come to pass. This year, fossil fuel and mining firms have initiated a historic level of suits against nations both wealthy and developing, contesting – as in the case of the Whitehaven project – state efforts to prevent environmental catastrophe. Firms have so far won vast sums by using ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP