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

Can you understand our system of government operates? Maybe along the lines of this. We elect MPs. They legislate on bills. If a majority is secured, the bills pass into law. Statutes is maintained by the courts. End of story. However, that used to be how it operated in the past. Those days are over.

The Emergence of Offshore Arbitration Panels

Today, international firms, and the oligarchs who own them, can sue nation states for the regulations they pass, at private courts made up of commercial attorneys. Such disputes are conducted in secret. Differing from national judiciaries, these tribunals provide no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies based in this country. Access is granted only to entities based overseas.

If a tribunal determines that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, potentially billions.

These sums constitute not real financial harm but compensation the tribunal officials conclude the company would perhaps have made. The government may have to rescind the measure. It becomes hesitant to passing future laws of a similar nature, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Unprecedented levels of legal actions are being filed, as firms take cues from each other, and private equity finance suits for a share of a share of the takings. The outcome? National sovereignty and popular rule are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to override national legislation and the rulings made by elected bodies is that this provision has been written – absent public approval, and frequently under a climate of total confidentiality – inside trade treaties.

A Real-World Case: The Cumbrian Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The presiding officer found that schemes to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine could have no consequence on climate commitments. The incoming administration later cancelled the consent the former government had approved. Currently, this success is under threat by an offshore tribunal reporting to exclusively the companies bringing the case.

Last August, a company whose beneficial owners are based in the offshore financial centre lodged a claim challenging the UK government. Recently a tribunal in the United States was convened to adjudicate on it.

The company is seeking compensation from the UK for the revenue it might have made if the mine had received permission to commence operations. Citizens have little idea how much this could amount to. Who is representing it against the British government? An elected representative, and former attorney-general in the outgoing administration, that great patriot Geoffrey Cox. The government passes a law, the high court upholds it, then a international entity challenges it through an unaccountable arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Case

Simultaneously that the panel on the coal mine dispute was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. Details are nothing of the case to date, but it seems likely that he will utilise the tribunal to challenge the penalties the UK imposed on him following the Russian aggression. He has already started suing a small nation with similar intent, demanding $16bn: half that nation's yearly income. Part of the counsel representing him there? a prominent lawyer, spouse of the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised state funds as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This unprecedented, unaccountable authority over sovereign states could be blocking the funds Ukraine desperately needs.

False Assurances and Mounting Threats

The public was told that these scenarios wouldn’t happen. Years ago, a former prime minister, championing the biggest and most dangerous of all such treaties, told us: “Britain has agreed to trade agreement upon trade deal and we have never seen a issue in the past.” A consultant on this issue labelled campaigners of “exaggeration … in reality, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “as corporations grasp the authority bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were dismissed with scepticism.

That threat is now a reality. Recently, fossil fuel and mining firms have lodged a record number of claims against nations across the economic spectrum, challenging – like the example of the Cumbrian coalmine – official measures to stop global warming. Companies have thus far won vast sums by using ISDS, of which energy giants have been awarded the majority. That is equivalent to the combined GDP