Greetings, Foreign Magnates and Corporations! Please Proceed and Take Legal Action Against the UK for Billions.

Can you perceive our democratic process works? Maybe similar to this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills become law. The law are enforced by the courts. That's it. Well, that was how it once functioned. Those days are over.

The Rise of Offshore Tribunals

Nowadays, overseas companies, along with the oligarchs who own them, are able to litigate against nation states for the laws they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings take place away from public scrutiny. In contrast to domestic courts, these tribunals grant no avenue for appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, including companies headquartered in this country. The door is open solely for corporations based overseas.

Should an arbitration panel finds that a law or policy could harm the corporation’s anticipated profits, it can award financial penalties of hundreds of millions of pounds, running into billions.

These sums are based not on tangible damages but compensation the tribunal officials decide the company would perhaps have made. The government might be compelled to rescind the measure. It is hesitant to enacting future policies of a similar nature, worried about incurring a lawsuit.

A Mechanism Growing Exponentially

Unprecedented levels of cases are being initiated, as companies take cues from each other, and investment funds bankroll lawsuits in exchange for a share of the awards. The consequence? National sovereignty and popular rule are now too costly.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to override national legislation and the decisions enacted by elected bodies is that this stipulation has been written – without public consent, and typically amid a climate of extreme secrecy – within international trade agreements.

A Real-World Instance: The Whitehaven Coal Mine

Last year, activists achieved a major legal triumph at the senior court. The judge ruled that plans to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine could have no impact on our carbon budgets. The new government then withdrew the consent the previous administration had issued. Today, this victory is under threat by an foreign court reporting to no one but the companies petitioning it.

In August, a company whose ultimate owners reside in the offshore financial centre lodged a claim challenging the UK government. The previous week a dispute settlement body in Washington DC was convened to hear it.

The claimant is litigating against the UK for the profits it would have generated if the mine had been allowed to proceed. Citizens have little idea how much this could amount to. Which individual is representing it in opposition to the British government? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The government enacts a policy, the high court upholds it, then a international entity challenges it through an undemocratic offshore tribunal, and a sitting MP represents its behalf.

A Sanctions Lawsuit

Simultaneously that the tribunal on the mining lawsuit was convened, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. The public knows little of the case so far, but it is highly possible that he may employ the tribunal to contest the sanctions the UK levied against him after the Russian aggression. He has filed a claim against another European state for this reason, seeking a colossal sum: half that nation's yearly budget. Included in the lawyers acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

Legal experts believe that the EU’s hesitation in utilising seized Russian assets as collateral for its loan to Ukraine is due to apprehension in Brussels that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This remarkable, unaccountable authority over elected governments might be preventing the finance Ukraine critically depends on.

False Assurances and Escalating Threats

Politicians promised that these events were not possible. Previously, a former prime minister, championing the most significant and hazardous of all these agreements, declared: “The UK has signed investment treaty upon trade deal and we have never seen a issue in the past.” An adviser on this topic accused campaigners of “alarmism … the truth is, ISDS barely touches the UK much”. The overall message appeared to be that exclusively weaker states needed to fear such legal actions. Warnings that “when companies begin to understand the authority bestowed upon them, they will turn their attention from the poorer states to the wealthy nations” were met with general mockery.

That prediction has come to pass. In the current period, oil and gas and resource corporations have initiated a record number of claims against nations both wealthy and developing, opposing – similar to the Cumbrian coalmine – state efforts to stop global warming. Companies have so far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have obtained $84bn. That is equivalent to the combined GDP