Hello, Foreign Oligarchs and Companies! Kindly Proceed and Litigate Against the UK for Billions.

What is your perceive our democratic process functions? It could be similar to this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. Simple as that. Yet, that was how it used to work. No longer.

The Rise of Shadow Tribunals

In the modern era, overseas companies, and the billionaires behind them, have the power to sue elected administrations for the regulations they pass, at secret arbitration panels composed of business advocates. The cases are held behind closed doors. Unlike our courts, these bodies allow no right of appeal or oversight by judges. You or I are unable to file a case to them, and neither can our government, including companies based in this country. They are open exclusively to businesses operating from foreign soil.

When a secret court finds that a law or policy could harm the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, even billions.

This compensation constitute not actual losses but funds the tribunal officials conclude the company could potentially have made. The administration could be forced to abandon its policy. It will be hesitant to introducing similar legislation in that area, for fear of being sued.

A Process Running Rampant

Record numbers of disputes are being filed, as companies observe each other, and investment funds fund legal actions in return for a share of the awards. The outcome? Sovereignty and democracy are turning into prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the decisions made by legislatures is that this clause has been written – absent public approval, and typically amid an atmosphere of extreme secrecy – into international trade agreements.

A Specific Instance: The Cumbrian Coal Mine

Last year, activists achieved a major legal triumph at the senior court. The judge determined that schemes to open the first deep coalmine in the UK for a generation, in northwest England, were found to be wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine would have had no impact on national carbon targets. The incoming administration then withdrew the permission the Tories had approved. Now, this victory could be compromised by an foreign court accountable to exclusively the corporations bringing the case.

Last August, a company whose ultimate owners reside in the Cayman Islands filed a lawsuit against the UK government. Recently a dispute settlement body in the United States was established to adjudicate on it.

This firm is suing the UK for the profits it would have generated if the mine had received permission to go ahead. Citizens have no idea how much this could amount to. What legal team is representing it against the state? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the high court supports it, then a overseas corporation challenges it through an unaccountable arbitration panel, and a elected official acts on its behalf.

An Oligarch's Case

Concurrently that the panel on the mining lawsuit was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case to date, but it seems likely that he’ll use the arbitration process to contest the sanctions the UK enacted against him after the invasion of Ukraine. He has started suing another European state with similar intent, seeking a colossal sum: half that state's yearly income. Among the counsel on his side? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts argue that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its financial support package stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, unaccountable authority over elected governments might be preventing the money Ukraine urgently requires.

False Assurances and Escalating Costs

We were assured that these scenarios could not occur. In 2014, a former prime minister, championing the most significant and hazardous of all investment pacts, stated: “We’ve signed trade agreement after trade deal and there has not been a problem in the past.” A consultant on this matter accused campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression seemed to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “when companies begin to understand the authority they now possess, they will turn their attention from the weak nations to the strong ones” were greeted by general mockery.

That prediction has now materialised. Recently, energy and extraction companies have lodged a unprecedented number of cases against nations both wealthy and developing, challenging – like the example of the UK mine – state efforts to halt climate breakdown. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That equates to the combined GDP