Greetings, Foreign Magnates and Firms! Kindly Proceed and Sue the UK for Vast Sums.

How do you perceive our democratic process works? Perhaps along the lines of this. We elect MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. Legislation are enforced by the courts. End of story. However, that’s how it operated in the past. Not anymore.

The Advent of Secret Courts

In the modern era, overseas companies, along with the oligarchs who own them, have the power to sue nation states for the regulations they pass, at secret arbitration panels composed of business advocates. Such disputes take place away from public scrutiny. Differing from national judiciaries, these bodies provide no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. They are open solely for businesses based overseas.

When a secret court determines that a government measure may compromise the corporation’s projected profits, it may order damages of hundreds of millions of pounds, potentially billions.

These awards represent not real financial harm but money the arbitrators determine the company might otherwise have made. The state could be forced to drop the legislation. It will be deterred from introducing similar legislation in that area, for fear of incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being brought, as companies observe each other, and investment funds fund legal actions in exchange for a portion of the settlements. The outcome? Democratic sovereignty and democracy are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the rulings enacted by elected bodies is that this clause has been inserted – without public consent, and typically amid an atmosphere of profound opacity – into trade treaties.

A Concrete Example: The Cumbrian Coal Mine

Last year, activists won a great victory at the senior court. The judge ruled that plans to dig the first deep coalmine in the UK for three decades, in northwest England, had been unlawfully approved by the Conservative government, which had agreed to the questionable argument that the mine would have had zero effect on our carbon budgets. The Labour government then withdrew the permission the former government had granted. Currently, this success is under threat by an offshore tribunal accountable to exclusively the companies bringing the case.

During August, a firm whose beneficial owners reside in the offshore financial centre lodged a claim challenging the UK government. The previous week a dispute settlement body in the United States was set up to consider the case.

The company is litigating against the UK for the revenue it would have generated if the mine had been allowed to proceed. The public has little idea how much this could amount to. What legal team is representing it challenging the state? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The government passes a law, the high court upholds it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a sitting MP represents its behalf.

A Sanctions Lawsuit

On the same day that the court on the coal mine dispute was established, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case so far, but it appears probable that he may employ the arbitration process to challenge the penalties the UK imposed on him subsequent to the invasion of Ukraine. He has already filed a claim against another European state for this reason, claiming a colossal sum: an amount representing half government’s yearly income. Part of the legal team representing him there? Cherie Blair, wife of the previous PM.

Trade specialists contend that the EU’s hesitation in using frozen oligarchs' funds as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This unprecedented, secretive influence over democratic administrations might be preventing the funds Ukraine desperately needs.

Misleading Claims and Escalating Risks

We were assured that these scenarios could not occur. In 2014, a government leader, advocating for the most significant and hazardous of all these agreements, stated: “The UK has signed trade agreement after trade deal and we have never seen a problem in the past.” A consultant on this matter labelled critics of “exaggeration … in reality, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries had to worry about such legal actions. Warnings that “once firms start to realise the authority they now possess, they will redirect their efforts from the vulnerable countries to the developed economies” were met with widespread derision.

That prediction has come to pass. In the current period, energy and resource corporations have lodged a record number of claims against nations across the economic spectrum, opposing – similar to the Whitehaven project – official measures to halt climate breakdown. Firms have to date won vast sums by using ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP