Greetings, Foreign Oligarchs and Companies! Please Come and Take Legal Action Against the UK for Vast Sums.

Can you understand our political system works? Maybe something like this. We elect MPs. They vote on bills. If a majority is achieved, the bills pass into law. Legislation is maintained by the courts. End of story. However, that used to be how it operated in the past. No longer.

The Advent of Shadow Arbitration Panels

Nowadays, overseas companies, or the wealthy individuals behind them, have the power to sue governments for the policies they pass, at offshore tribunals composed of business advocates. These proceedings are conducted behind closed doors. In contrast to domestic courts, these tribunals allow no opportunity to appeal or legal review. The general public are barred from bringing a case to them, nor can our government, or even enterprises based in this country. The door is open only to businesses operating from foreign soil.

If a tribunal finds that a government measure may compromise the corporation’s expected profits, it can award compensation of hundreds of millions, potentially billions.

These sums constitute not real financial harm but money the tribunal officials conclude the company might otherwise have made. The state may have to rescind the measure. It is hesitant to introducing similar legislation in that area, due to the risk of being sued.

A Process Running Rampant

Record numbers of disputes are being initiated, as corporations observe each other, and investment funds finance suits in exchange for a cut of the settlements. The result? Democratic sovereignty and democratic governance are becoming unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump domestic law and the decisions taken by legislatures is that this clause has been written – without public consent, and often in conditions of total confidentiality – into international trade agreements.

A Concrete Example: The Cumbrian Coal Mine

A year ago, a conservation group secured a significant win at the senior court. The presiding officer found that plans to open the first major coal mine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine could have zero effect on our carbon budgets. The Labour government subsequently revoked the licence the Tories had granted. Currently, this legal outcome is under threat by an secret arbitration panel accountable to no one but the corporations bringing the case.

Last August, a firm whose beneficial owners reside in the tax haven lodged a claim challenging the UK government. Recently a dispute settlement body in the US capital was set up to hear it.

This firm is suing the UK for the profits it could have earned if the mine had received permission to commence operations. Citizens have no clear indication how much this might be. Which individual is acting on its behalf in opposition to the British government? A sitting MP, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a foreign company challenges it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

The Russian Case

Simultaneously that the panel on the mining lawsuit was established, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. Details are nothing of the case so far, but it is highly possible that he will utilise the arbitration process to contest the penalties the UK imposed on him subsequent to the invasion of Ukraine. He has previously initiated proceedings against a small nation on these grounds, seeking sixteen billion dollars: half that nation's yearly income. Among the legal team representing him there? the wife of a former prime minister, married to the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as guarantee for its aid for Ukraine stems from concerns within Belgium that it could be sued in the secret arbitration panels, under a investment pact. This unprecedented, secretive influence over elected governments could be blocking the money Ukraine critically depends on.

Misleading Claims and Growing Costs

The public was told that these scenarios could not occur. In 2014, a government leader, advocating for the biggest and most dangerous of all investment pacts, told us: “Britain has agreed to trade deal after trade deal and there has not been a issue in the past.” An adviser on this issue described campaigners of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “once firms begin to understand the power they’ve been granted, they will turn their attention from the poorer states to the developed economies” were greeted by general mockery.

That prediction has come to pass. This year, oil and gas and extraction companies have initiated a unprecedented number of claims against nations both wealthy and developing, opposing – similar to the Whitehaven project – government attempts to halt environmental catastrophe. Firms have thus far won vast sums through ISDS, of which energy giants have been awarded eighty-four billion dollars. That is equivalent to the combined GDP