Hello, Foreign Oligarchs and Corporations! Kindly Proceed and Litigate Against the UK for Billions of Pounds.

What is your reckon our political system operates? Perhaps along the lines of this. The public votes for MPs. They debate and pass bills. Should a majority is achieved, the bills become law. The law is maintained by the courts. Simple as that. However, that’s how it used to work. Those days are over.

The Rise of Shadow Tribunals

In the modern era, international firms, or the oligarchs that control them, have the power to sue elected administrations for the laws they pass, at private courts composed of commercial attorneys. Such disputes are conducted in secret. Differing from national judiciaries, these panels allow no right of appeal or legal review. The general public cannot take a case to them, nor can our government, or even enterprises headquartered in this country. They are open exclusively to entities operating from foreign soil.

If a tribunal rules that a government measure may compromise the corporation’s expected profits, it can award financial penalties of vast sums, running into billions.

These awards constitute not real financial harm but compensation the panel members decide the company could potentially have made. The administration could be forced to rescind the measure. It becomes deterred from enacting future policies of a similar nature, worried about being sued.

A System Growing Exponentially

Record numbers of legal actions are being brought, as firms learn from each other, and private equity finance suits in return for a cut of the takings. The consequence? National sovereignty and popular rule are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump national legislation and the decisions made by parliaments is that this stipulation has been inserted – without public consent, and often in conditions of profound opacity – within trade treaties.

A Specific Case: The Cumbrian Coal Mine

Last year, activists secured a significant win at the High Court. The justice determined that plans to dig the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were found to be wrongly permitted by the Conservative government, which had accepted the bizarre claim that the mine could have no impact on climate commitments. The Labour government then withdrew the permission the former government had approved. Currently, this success faces being overturned by an offshore tribunal accountable to no one but the corporations bringing the case.

Last August, a firm whose beneficial owners reside in the tax haven filed a lawsuit versus the UK government. Recently a arbitration panel in Washington DC was convened to hear it.

This firm is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. The public has no clear indication how much this could amount to. What legal team is serving as its counsel against the British government? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the national judiciary validates it, then a foreign company disputes it through an secretive offshore tribunal, and a sitting MP works for its behalf.

An Oligarch's Challenge

Simultaneously that the panel on the coal mine dispute was convened, information emerged from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. Details are nothing of the case to date, but it seems likely that he will utilise the ISDS mechanism to contest the penalties the UK enacted against him subsequent to the invasion of Ukraine. He has already started suing another European state with similar intent, claiming sixteen billion dollars: half that state's yearly budget. Part of the counsel acting for him in that case? Cherie Blair, married to the former British prime minister.

Trade specialists contend that the EU’s hesitation in leveraging immobilised Russian assets as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be sued in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over sovereign states might be preventing the funds Ukraine desperately needs.

Misleading Claims and Mounting Costs

The public was told that these events were not possible. Previously, a former prime minister, advocating for the largest and riskiest of all investment pacts, told us: “We’ve signed trade agreement upon trade deal and we have never seen a case in the past.” An expert on this topic described critics of “alarmism … in reality, ISDS has little impact on the UK much”. The overall message was crafted to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “when companies grasp the authority they’ve been granted, they will turn their attention from the poorer states to the strong ones” were greeted by scepticism.

That threat is now a reality. This year, oil and gas and extraction companies have lodged a historic level of cases against nations rich and poor, contesting – similar to the UK mine – state efforts to halt climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded eighty-four billion dollars. That is equivalent to the combined GDP