Hello, International Magnates and Firms! Please Proceed and Sue the UK for Vast Sums.

Can you understand our political system functions? Perhaps similar to this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills become law. Statutes is upheld by the courts. That's it. However, that used to be how it used to work. Not anymore.

The Rise of Offshore Tribunals

Today, international firms, and the oligarchs that control them, can sue governments for the laws they pass, at secret arbitration panels staffed by business advocates. Such disputes are conducted away from public scrutiny. In contrast to domestic courts, these panels grant no opportunity to appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even companies based in this country. They are open exclusively to entities registered abroad.

If a tribunal rules that a legislative action could harm the corporation’s projected profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

This compensation represent not tangible damages but funds the arbitrators conclude the company could potentially have made. The state might be compelled to drop the legislation. It will be hesitant to introducing similar legislation of a similar nature, worried about facing litigation.

A Process Running Rampant

Record numbers of cases are being filed, as companies learn from each other, and private equity bankroll lawsuits in return for a cut of the takings. The consequence? National sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede a country's own laws and the choices enacted by elected bodies is that this stipulation has been incorporated – without public consent, and often in conditions of total confidentiality – into international trade agreements.

A Concrete Example: The UK Coalmine

Last year, activists achieved a major legal triumph at the high court. The presiding officer found that schemes to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the previous government, which had accepted the bizarre claim that the mine could have no consequence on climate commitments. The new government later cancelled the consent the previous administration had issued. Currently, this victory is under threat by an offshore tribunal reporting to only the companies petitioning it.

In August, a corporate entity whose final controllers are based in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the United States was convened to adjudicate on it.

This firm is litigating against the UK for the revenue it would have generated if the mine had received permission to go ahead. Citizens have no clear indication how much this could amount to. What legal team is acting on its behalf challenging the UK administration? An elected representative, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The government passes a law, the national judiciary supports it, then a overseas corporation contests it through an secretive private court, and a elected official represents its behalf.

A Sanctions Case

On the same day that the court on the coalmine case was established, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case so far, but it appears probable that he may employ the tribunal to challenge the penalties the UK enacted against him after the war in Ukraine. He has filed a claim against another European state for this reason, demanding sixteen billion dollars: half that nation's yearly income. Part of the counsel representing him there? Cherie Blair, wife of the ex-UK leader.

Legal experts argue that the EU’s hesitation in leveraging immobilised state funds as security for its financial support package is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a investment pact. This extraordinary, unaccountable authority over sovereign states could be blocking the finance Ukraine desperately needs.

False Assurances and Growing Threats

We were assured that these events wouldn’t happen. Years ago, a senior politician, championing the largest and riskiest of all investment pacts, declared: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” A consultant on this matter labelled critics of “alarmism … the fact is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that exclusively weaker states had to worry about ISDS claims. Warnings that “once firms begin to understand the power they now possess, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with general mockery.

That prediction has come to pass. This year, fossil fuel and mining firms have lodged a record number of claims against nations rich and poor, contesting – as in the case of the UK mine – state efforts to halt climate breakdown. Firms have to date won vast sums via ISDS, of which oil majors have secured $84bn. That represents the combined GDP