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

What is your perceive our democratic process functions? Perhaps along the lines of this. We elect MPs. They legislate on bills. When a majority is secured, the bills become law. The law is maintained by the courts. End of story. Well, that used to be how it used to work. Not anymore.

The Advent of Shadow Courts

Today, foreign corporations, and the billionaires that control them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels staffed by business advocates. The cases are conducted away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, or even businesses based in this country. They are open exclusively to corporations based overseas.

When a secret court finds that a legislative action may compromise the corporation’s projected profits, it may order compensation of hundreds of millions of pounds, potentially billions.

This compensation represent not actual losses but funds the tribunal officials conclude the company could potentially have made. The government may have to drop the legislation. It will be discouraged from passing future laws of a similar nature, worried about facing litigation.

A System Growing Exponentially

Record numbers of disputes are being brought, as companies take cues from each other, and investment funds bankroll lawsuits in return for a share of the awards. The outcome? National sovereignty and popular rule are turning into unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the decisions enacted by parliaments is that this provision has been inserted – absent public approval, and frequently under an atmosphere of extreme secrecy – into international trade agreements.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the high court. The judge found that plans to open the first major coal mine in the UK for 30 years, in Cumbria, 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 Labour government later cancelled the permission the Tories had approved. Now, this success is under threat by an offshore tribunal reporting to no one but the entities filing the suit.

In August, a firm whose ultimate owners are located in the tax haven filed a lawsuit versus the UK government. Last week a dispute settlement body in Washington DC was established to consider the case.

This firm is suing the UK for the revenue it could have earned if the mine had received permission to proceed. Citizens have no clear indication how much this could amount to. Who is representing it against the UK administration? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a overseas corporation contests it through an undemocratic private court, and a elected official acts on its behalf.

A Sanctions Challenge

On the same day that the tribunal on the mining lawsuit was convened, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know little of the case at present, but it seems likely that he will utilise the arbitration process to fight the penalties the UK imposed on him subsequent to the Russian aggression. He has started suing Luxembourg on these grounds, claiming a colossal sum: half that state's yearly budget. Part of the lawyers on his side? the wife of a former prime minister, wife of the ex-UK leader.

Legal experts believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine stems from Belgium’s fear that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over democratic administrations could be blocking the finance Ukraine desperately needs.

False Assurances and Escalating Risks

Politicians promised that such things could not occur. In 2014, a government leader, promoting the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to investment treaty upon trade deal and there has not been a problem in the past.” An adviser on this topic accused activists of “alarmism … in reality, ISDS barely touches the UK much”. The overall message appeared to be that solely developing countries needed to fear ISDS claims. Warnings that “when companies start to realise the influence they’ve been granted, they will redirect their efforts from the poorer states to the developed economies” were greeted by scepticism.

That warning has come to pass. In the current period, energy and extraction companies have lodged a record number of cases against nations across the economic spectrum, opposing – like the example of the UK mine – official measures to prevent global warming. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That represents the combined GDP