Greetings, Foreign Tycoons and Firms! Please Come and Sue the UK for Billions.

Can you reckon our democratic process operates? Maybe similar to this. We elect MPs. They debate and pass bills. If a majority is secured, the bills pass into law. Statutes are enforced by the courts. Simple as that. Well, that used to be how it used to work. Not anymore.

The Emergence of Shadow Tribunals

In the modern era, international firms, or the oligarchs behind them, are able to litigate against elected administrations for the regulations they pass, at private courts staffed by business advocates. The cases are conducted in secret. Differing from national judiciaries, these panels grant no opportunity to appeal or judicial review. The general public are unable to file a case to them, nor can our government, or even companies based in this country. They are open exclusively to businesses based overseas.

If a tribunal determines that a government measure could harm the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

These awards constitute not actual losses but funds the tribunal officials decide the company might otherwise have made. The government could be forced to rescind the measure. It will be hesitant to enacting future policies of a similar nature, due to the risk of being sued.

A System Running Rampant

Record numbers of legal actions are being filed, as companies take cues from each other, and investment funds finance suits in exchange for a share of the takings. The outcome? Sovereignty and democratic governance are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede national legislation and the decisions enacted by parliaments is that this provision has been incorporated – without democratic mandate, and often in an atmosphere of profound opacity – within trade treaties.

A Real-World Instance: The Whitehaven Coalmine

Last year, environmental campaigners secured a significant win at the high court. The judge found that plans to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine would have no impact on national carbon targets. The Labour government subsequently revoked the licence the previous administration had approved. Today, this legal outcome is under threat by an secret arbitration panel reporting to no one but the entities filing the suit.

In August, a firm whose ultimate owners are based in the tax haven lodged a claim against the UK government. Recently a dispute settlement body in the US capital was established to hear it.

This firm is suing the UK for the profits it could have earned if the mine had received permission to go ahead. The public has no idea how much this sum represents. What legal team is serving as its counsel challenging the British government? A member of parliament, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a international entity contests it through an secretive private court, and a elected official represents its behalf.

The Russian Challenge

Simultaneously that the tribunal on the coal mine dispute was appointed, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know nothing of the case so far, but it appears probable that he will utilise the ISDS mechanism to contest the penalties the UK levied against him following the Russian aggression. He has previously started suing a small nation on these grounds, claiming sixteen billion dollars: equivalent to half of state's yearly budget. Among the counsel acting for him in that case? Cherie Blair, spouse of the former British prime minister.

International law scholars contend that the EU’s delay in leveraging immobilised state funds as collateral for its loan to Ukraine stems from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, unaccountable authority over sovereign states might be preventing the finance Ukraine critically depends on.

Empty Promises and Growing Costs

Politicians promised that these scenarios could not occur. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, stated: “We’ve signed investment treaty after trade deal and we have never seen a issue in the past.” An expert on this issue accused activists of “alarmism … the truth is, ISDS barely touches the UK much”. The overall message appeared to be that exclusively weaker states had to worry about such legal actions. Predictions that “when companies start to realise the power they now possess, they will shift their focus from the weak nations to the developed economies” were dismissed with widespread derision.

That prediction has come to pass. Recently, oil and gas and mining firms have lodged a unprecedented number of suits against nations rich and poor, contesting – similar to the Cumbrian coalmine – government attempts to stop global warming. Firms have to date won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded $84bn. That is equivalent to the combined GDP