Hello, International Tycoons and Corporations! Please Proceed and Litigate Against the UK for Vast Sums.

Can you perceive our political system functions? It could be along the lines of this. We elect MPs. They vote on bills. Should a majority is obtained, the bills become law. Legislation is maintained by the courts. Simple as that. Well, that’s how it used to work. Not anymore.

The Advent of Secret Courts

Nowadays, foreign corporations, along with the wealthy individuals who own them, have the power to sue governments for the laws they pass, at secret arbitration panels staffed by business advocates. These proceedings are conducted in secret. Unlike our courts, these tribunals grant no avenue for appeal or judicial review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies operating from this country. Access is granted solely for corporations operating from foreign soil.

When a secret court rules that a government measure could harm the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, running into billions.

These sums constitute not tangible damages but compensation the arbitrators determine the company would perhaps have made. The administration could be forced to drop the legislation. It will be deterred from passing future laws along the same lines, worried about facing litigation.

A Process Running Rampant

Record numbers of cases are being initiated, as companies take cues from each other, and investment funds finance suits for a share of a share of the takings. The outcome? Sovereignty and democracy are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the rulings enacted by legislatures is that this clause has been written – without democratic mandate, and typically amid an atmosphere of extreme secrecy – within bilateral investment treaties.

A Concrete Example: The Whitehaven Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The presiding officer ruled that proposals to excavate the first new deep coal mine in the UK for a generation, in Cumbria, had been wrongly permitted by the Conservative government, which had accepted the questionable argument that the mine would have zero effect on our carbon budgets. The incoming administration later cancelled the licence the Tories had issued. Today, this success could be compromised by an foreign court accountable to only the corporations petitioning it.

In August, a company whose final controllers are based in the tax haven lodged a claim challenging the UK government. Last week a tribunal in the United States was convened to consider the case.

The claimant is suing the UK for the money it might have made if the mine had been allowed to go ahead. The public has no idea how much this might be. Who is serving as its counsel challenging the state? An elected representative, and ex-law officer in the previous government, that great patriot the MP. The state makes a decision, the domestic court supports it, then a overseas corporation challenges it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

The Russian Lawsuit

Simultaneously that the panel on the coal mine dispute was established, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are little of the case at present, but it appears probable that he will utilise the ISDS mechanism to contest the penalties the UK enacted against him subsequent to the Russian aggression. He has filed a claim against Luxembourg with similar intent, claiming a colossal sum: an amount representing half state's yearly income. Included in the lawyers representing him there? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s procrastination in leveraging immobilised state funds as security for its financial support package arises from apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This extraordinary, secretive influence over democratic administrations may be obstructing the money Ukraine urgently requires.

Misleading Claims and Escalating Threats

The public was told that such things could not occur. Previously, a former prime minister, advocating for the largest and riskiest of all such treaties, told us: “Britain has agreed to investment treaty after trade deal and there has never been a case in the past.” An adviser on this topic accused activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that solely developing countries needed to fear these lawsuits. Warnings that “when companies start to realise the power bestowed upon them, they will shift their focus from the poorer states to the developed economies” were greeted by scepticism.

That prediction has now materialised. Recently, fossil fuel and extraction companies have filed a record number of suits against nations rich and poor, contesting – similar to the UK mine – government attempts to halt environmental catastrophe. Companies have so far won $114bn by using ISDS, of which energy giants have obtained $84bn. That represents the combined GDP