Greetings, International Tycoons and Firms! Please Proceed and Litigate Against the UK for Billions.

Can you perceive our political system operates? Maybe along the lines of this. Citizens choose MPs. They vote on bills. When a majority is achieved, the bills pass into law. The law is upheld by the courts. End of story. Well, that’s how it used to work. Not anymore.

The Advent of Shadow Courts

Nowadays, international firms, and the billionaires behind them, are able to litigate against governments for the laws they pass, at private courts composed of business advocates. The cases take place away from public scrutiny. Unlike our courts, these tribunals provide no avenue for appeal or judicial review. Ordinary citizens are barred from bringing a case to them, nor can our government, including businesses headquartered in this country. They are open solely for businesses based overseas.

If a tribunal determines that a law or policy might diminish the corporation’s projected profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

These sums represent not actual losses but money the tribunal officials conclude the company might otherwise have made. The state might be compelled to abandon its policy. It is deterred from passing future laws along the same lines, worried about being sued.

A Mechanism Running Rampant

Historically high figures of legal actions are being filed, as companies learn from each other, and investment funds finance suits in return for a cut of the settlements. The outcome? Democratic sovereignty and popular rule are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override national legislation and the rulings enacted by legislatures is that this stipulation has been written – without democratic mandate, and typically amid conditions of total confidentiality – inside international trade agreements.

A Specific Example: The UK Coalmine

A year ago, activists achieved a major legal triumph at the high court. The justice ruled that schemes to dig the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be unlawfully approved by the Conservative government, which had agreed to the extraordinary assertion that the mine would have no impact on national carbon targets. The new government later cancelled the consent the Tories had approved. Now, this legal outcome is under threat by an secret arbitration panel reporting to no one but the entities bringing the case.

During August, a firm whose beneficial owners are based in the Cayman Islands lodged a claim challenging the UK government. Last week a dispute settlement body in Washington DC was established to hear it.

The company is suing the UK for the money it might have made if the mine had been permitted to proceed. We have little idea how much this could amount to. What legal team is serving as its counsel against the UK administration? An elected representative, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot the MP. The government makes a decision, the national judiciary validates it, then a foreign company challenges it through an secretive private court, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the court on the coal mine dispute was appointed, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know little of the case so far, but it seems likely that he may employ the tribunal to challenge the restrictions the UK levied against him after the war in Ukraine. He has already started suing Luxembourg on these grounds, seeking $16bn: equivalent to half of state's yearly budget. Among the counsel on his side? Cherie Blair, spouse of the former British prime minister.

Legal experts contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its financial support package arises from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over elected governments may be obstructing the finance Ukraine urgently requires.

Misleading Claims and Growing Threats

The public was told that these scenarios were not possible. In 2014, a senior politician, advocating for the most significant and hazardous of all these agreements, declared: “The UK has signed trade agreement after trade deal and there has not been a problem in the past.” An expert on this matter accused activists of “alarmism … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by such legal actions. Predictions that “once firms start to realise the influence they’ve been granted, they will shift their focus from the weak nations to the developed economies” were met with widespread derision.

That warning has come to pass. In the current period, fossil fuel and mining firms have initiated a historic level of claims against nations rich and poor, opposing – as in the case of the UK mine – government attempts to stop environmental catastrophe. Corporations have to date won $114bn via ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP