Greetings, Overseas Oligarchs and Firms! Please Proceed and Take Legal Action Against the UK for Billions of Pounds.

What is your understand our system of government works? Maybe similar to this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills become law. Statutes is maintained by the courts. Simple as that. Yet, that used to be how it once functioned. Not anymore.

The Emergence of Offshore Tribunals

Today, international firms, or the billionaires who own them, are able to litigate against governments for the laws they pass, at secret arbitration panels composed of business advocates. Such disputes take place behind closed doors. In contrast to domestic courts, these tribunals allow no opportunity to appeal or legal review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even businesses operating from this country. Access is granted only to entities registered abroad.

Should an arbitration panel rules that a government measure might diminish the corporation’s projected profits, it has the power to grant compensation of vast sums, running into billions.

This compensation are based not on actual losses but compensation the tribunal officials determine the company might otherwise have made. The administration could be forced to rescind the measure. It will be hesitant to passing future laws along the same lines, for fear of facing litigation.

A Mechanism Growing Exponentially

Record numbers of legal actions are being filed, as corporations take cues from each other, and private equity bankroll lawsuits for a share of a cut of the settlements. The result? National sovereignty and democratic governance are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the choices enacted by legislatures is that this clause has been inserted – absent public approval, and typically amid conditions of total confidentiality – into bilateral investment treaties.

A Real-World Example: The Whitehaven Coal Mine

Last year, activists achieved a major legal triumph at the High Court. The presiding officer determined that plans to dig the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The incoming administration subsequently revoked the permission the previous administration had approved. Today, this legal outcome faces being overturned by an secret arbitration panel accountable to no one but the corporations petitioning it.

During August, a firm whose beneficial owners are located in the Cayman Islands initiated proceedings versus the UK government. Recently a dispute settlement body in the United States was set up to adjudicate on it.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to proceed. Citizens have no clear indication how much this sum represents. What legal team is representing it in opposition to the state? A member of parliament, and ex-law officer in the outgoing administration, that great patriot the MP. The government passes a law, the national judiciary supports it, then a overseas corporation contests it through an secretive arbitration panel, and a sitting MP acts on its behalf.

The Russian Case

On the same day that the tribunal on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know little of the case so far, but it is highly possible that he may employ the tribunal to challenge the penalties the UK levied against him subsequent to the invasion of Ukraine. He has previously initiated proceedings against a small nation with similar intent, claiming a colossal sum: half that state's annual revenue. Part of the legal team on his side? the wife of a former prime minister, spouse of the former British prime minister.

Trade specialists believe that the EU’s procrastination in utilising seized oligarchs' funds as collateral for its aid for Ukraine stems from concerns within Belgium that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, undemocratic power over democratic administrations could be blocking the funds Ukraine critically depends on.

Empty Promises and Escalating Threats

The public was told that these scenarios wouldn’t happen. Years ago, a government leader, advocating for the most significant and hazardous of all such treaties, stated: “We’ve signed investment treaty upon trade deal and we have never seen a problem in the past.” An expert on this matter accused critics of “alarmism … in reality, ISDS does not affect the UK much”. The prevailing narrative appeared to be that solely developing countries had to worry about ISDS claims. Warnings that “when companies start to realise the authority they now possess, they will turn their attention from the poorer states to the developed economies” were greeted by scepticism.

That warning has now materialised. Recently, energy and mining firms have initiated a unprecedented number of suits against nations rich and poor, opposing – as in the case of the UK mine – government attempts to stop climate breakdown. Firms have to date won $114bn through ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP