Hello, Overseas Oligarchs and Firms! Please Come and Take Legal Action Against the UK for Billions.

How do you perceive our democratic process functions? Perhaps along the lines of this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. Statutes is maintained by the courts. That's it. Well, that used to be how it used to work. No longer.

The Advent of Secret Courts

In the modern era, overseas companies, and the oligarchs behind them, have the power to sue nation states for the policies they pass, at offshore tribunals made up of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these panels allow no right of appeal or legal review. The general public are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. The door is open solely for entities based overseas.

When a secret court rules that a government measure may compromise the corporation’s expected profits, it may order financial penalties of hundreds of millions of pounds, running into billions.

This compensation are based not on tangible damages but funds the tribunal officials decide the company might otherwise have made. The administration might be compelled to drop the legislation. It becomes discouraged from introducing similar legislation of a similar nature, worried about being sued.

A Mechanism Running Rampant

Record numbers of legal actions are being filed, as companies take cues from each other, and private equity bankroll lawsuits for a share of a portion of the awards. The result? Sovereignty and democratic governance are now too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the choices taken by elected bodies is that this clause has been written – absent public approval, and often in an atmosphere of total confidentiality – inside trade treaties.

A Real-World Case: The Whitehaven Coal Mine

Last year, activists secured a significant win at the high court. The justice found that proposals to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine would have no impact on our carbon budgets. The new government subsequently revoked the consent the former government had issued. Currently, this victory is under threat by an foreign court answering to no one but the entities filing the suit.

Last August, a company whose beneficial owners are based in the offshore financial centre lodged a claim challenging the UK government. Recently a dispute settlement body in the United States was convened to consider the case.

The claimant is suing the UK for the money it could have earned if the mine had been allowed to proceed. The public has no idea how much this sum represents. Which individual is serving as its counsel against the state? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot the MP. The state passes a law, the high court upholds it, then a international entity disputes it through an unaccountable offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Lawsuit

Simultaneously that the panel on the coal mine dispute was established, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. The public knows nothing of the case so far, but it seems likely that he may employ the arbitration process to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has filed a claim against another European state with similar intent, seeking $16bn: half that nation's yearly budget. Part of the counsel representing him there? the wife of a former prime minister, married to the ex-UK leader.

Trade specialists argue that the EU’s procrastination in leveraging immobilised oligarchs' funds as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, secretive influence over democratic administrations may be obstructing the finance Ukraine critically depends on.

Empty Promises and Escalating Threats

We were assured that these scenarios were not possible. Previously, a former prime minister, promoting the biggest and most dangerous of all these agreements, stated: “The UK has signed investment treaty after trade deal and there has never been a problem in the past.” An expert on this topic accused critics of “alarmism … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that solely developing countries had to worry about these lawsuits. Warnings that “as corporations begin to understand the power bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were greeted by widespread derision.

That threat is now a reality. This year, fossil fuel and extraction companies have lodged a record number of cases against nations across the economic spectrum, opposing – similar to the Cumbrian coalmine – official measures to stop global warming. Companies have thus far won vast sums by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP