Greetings, International Magnates and Companies! Please Come and Sue the UK for Billions of Pounds.

Can you understand our system of government operates? It could be something like this. The public votes for MPs. They debate and pass bills. When a majority is obtained, the bills become law. Legislation is upheld by the courts. That's it. Yet, that’s how it used to work. Those days are over.

The Rise of Secret Tribunals

In the modern era, international firms, and the billionaires behind them, can sue elected administrations for the regulations they pass, at offshore tribunals staffed by business advocates. The cases are conducted in secret. Differing from national judiciaries, these tribunals allow no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. They are open exclusively to businesses registered abroad.

Should an arbitration panel finds that a legislative action might diminish the corporation’s expected profits, it may order damages of hundreds of millions, even billions.

This compensation are based not on actual losses but funds the tribunal officials determine the company might otherwise have made. The government could be forced to abandon its policy. It will be hesitant to enacting future policies along the same lines, worried about facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being filed, as firms observe each other, and private equity fund legal actions in return for a cut of the settlements. The outcome? Democratic sovereignty and democratic governance are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it can trump national legislation and the rulings taken by parliaments is that this provision has been written – without democratic mandate, and often in an atmosphere of total confidentiality – within trade treaties.

A Real-World Example: The Whitehaven Coalmine

Twelve months ago, a conservation group won a great victory at the senior court. The judge ruled that plans to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have no impact on our carbon budgets. The Labour government subsequently revoked the permission the previous administration had granted. Now, this success faces being overturned by an secret arbitration panel accountable to exclusively the corporations petitioning it.

In August, a company whose final controllers are based in the offshore financial centre lodged a claim against the UK government. Last week a tribunal in Washington DC was set up to consider the case.

The claimant is suing the UK for the money it could have earned if the mine had been allowed to commence operations. Citizens have little idea how much this sum represents. Who is representing it against the British government? An elected representative, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the high court validates it, then a foreign company challenges it through an unaccountable private court, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the mining lawsuit was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. Details are nothing of the case so far, but it is highly possible that he may employ the tribunal to fight the restrictions the UK enacted against him following the Russian aggression. He has initiated proceedings against a small nation on these grounds, demanding a colossal sum: an amount representing half government’s yearly income. Included in the lawyers acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

International law scholars argue that the EU’s delay in utilising seized Russian assets as collateral for its aid for Ukraine stems from Belgium’s fear that it could be sued in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over sovereign states may be obstructing the finance Ukraine urgently requires.

Misleading Claims and Growing Costs

The public was told that such things wouldn’t happen. Years ago, a government leader, championing the largest and riskiest of all investment pacts, told us: “The UK has signed investment treaty upon trade deal and there has never been a problem in the past.” A consultant on this matter labelled activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states needed to fear ISDS claims. Warnings that “as corporations grasp the power they now possess, they will redirect their efforts from the weak nations to the developed economies” were dismissed with general mockery.

That warning is now a reality. In the current period, oil and gas and mining firms have lodged a record number of claims against nations both wealthy and developing, contesting – like the example of the Whitehaven project – state efforts to prevent global warming. Firms have so far won vast sums via ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP