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

How do you perceive our democratic process operates? Perhaps something like this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills become law. The law is maintained by the courts. End of story. Well, that’s how it used to work. No longer.

The Emergence of Secret Courts

In the modern era, overseas companies, or the wealthy individuals behind them, can sue elected administrations for the policies they pass, at secret arbitration panels made up of business advocates. The cases take place in secret. Differing from national judiciaries, these bodies provide no avenue for appeal or judicial review. You or I are unable to file a case to them, and neither can our government, or even businesses operating from this country. They are open only to businesses operating from foreign soil.

When a secret court rules that a legislative action may compromise the corporation’s projected profits, it can award financial penalties of hundreds of millions of pounds, running into billions.

These awards are based not on tangible damages but funds the panel members conclude the company might otherwise have made. The administration could be forced to abandon its policy. It will be discouraged from enacting future policies along the same lines, for fear of incurring a lawsuit.

A Process Running Rampant

Historically high figures of disputes are being brought, as companies learn from each other, and private equity fund legal actions in exchange for a share of the awards. The consequence? Democratic sovereignty and popular rule are becoming too costly.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the decisions made by legislatures is that this stipulation has been written – without public consent, and typically amid conditions of profound opacity – into bilateral investment treaties.

A Real-World Case: The UK Coalmine

Twelve months ago, a conservation group secured a significant win at the senior court. The presiding officer determined that proposals to dig the first deep coalmine in the UK for a generation, in northwest England, had been wrongly permitted by the Conservative government, which had endorsed the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration later cancelled the licence the Tories had approved. Currently, this success could be compromised by an foreign court answering to only the companies petitioning it.

Last August, a corporate entity whose beneficial owners reside in the tax haven lodged a claim challenging the UK government. The previous week a arbitration panel in the US capital was established to adjudicate on it.

The claimant is litigating against the UK for the money it could have earned if the mine had been permitted to proceed. Citizens have no clear indication how much this sum represents. Which individual is representing it in opposition to the British government? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the domestic court upholds it, then a international entity disputes it through an unaccountable private court, and a member of our parliament works for its behalf.

A Sanctions Challenge

Concurrently that the panel on the coalmine case was established, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know scarce of the case at present, but it is highly possible that he’ll use the tribunal to contest the restrictions the UK levied against him after the war in Ukraine. He has previously initiated proceedings against another European state on these grounds, seeking sixteen billion dollars: equivalent to half of state's yearly budget. Part of the counsel on his side? a prominent lawyer, married to the former British prime minister.

International law scholars contend that the EU’s procrastination in utilising seized Russian assets as collateral for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, unaccountable authority over elected governments may be obstructing the funds Ukraine critically depends on.

Empty Promises and Escalating Threats

Politicians promised that such things could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all such treaties, stated: “We’ve signed trade deal upon trade deal and there has not been a case in the past.” An adviser on this matter described critics of “exaggeration … in reality, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries had to worry about ISDS claims. Warnings that “as corporations start to realise the influence they’ve been granted, they will shift their focus from the poorer states to the strong ones” were dismissed with scepticism.

That prediction has come to pass. This year, fossil fuel and extraction companies have initiated a unprecedented number of claims against nations across the economic spectrum, challenging – as in the case of the Whitehaven project – official measures to halt global warming. Companies have thus far won vast sums via ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP