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

Can you understand our system of government functions? It could be along the lines of this. We elect MPs. They legislate on bills. If a majority is secured, the bills become law. Legislation is maintained by the courts. Simple as that. Yet, that was how it operated in the past. No longer.

The Emergence of Offshore Courts

In the modern era, foreign corporations, or the billionaires behind them, have the power to sue elected administrations for the laws they pass, at offshore tribunals made up of business advocates. Such disputes are conducted in secret. In contrast to domestic courts, these bodies provide no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, including businesses headquartered in this country. They are open only to businesses registered abroad.

Should an arbitration panel finds that a legislative action might diminish the corporation’s expected profits, it can award financial penalties of vast sums, even billions.

These sums constitute not actual losses but funds the tribunal officials conclude the company might otherwise have made. The administration might be compelled to rescind the measure. It will be hesitant to introducing similar legislation of a similar nature, worried about facing litigation.

A System Running Rampant

Unprecedented levels of cases are being brought, as corporations observe each other, and private equity bankroll lawsuits in return for a portion of the takings. The consequence? Sovereignty and democracy are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede a country's own laws and the choices enacted by elected bodies is that this provision has been incorporated – without democratic mandate, and frequently under an atmosphere of extreme secrecy – inside international trade agreements.

A Specific Instance: The Cumbrian Coalmine

Twelve months ago, activists secured a significant win at the senior court. The judge found that proposals to open the first major coal mine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine would have had no impact on climate commitments. The new government then withdrew the licence the former government had approved. Currently, this victory faces being overturned by an secret arbitration panel accountable to only the corporations petitioning it.

Last August, a corporate entity whose beneficial owners are based in the Cayman Islands initiated proceedings challenging the UK government. Recently a arbitration panel in Washington DC was established to adjudicate on it.

This firm is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. Citizens have little idea how much this could amount to. Which individual is representing it against the British government? A member of parliament, and former attorney-general in the previous government, that great patriot the MP. The administration enacts a policy, the high court upholds it, then a overseas corporation disputes it through an secretive offshore tribunal, and a member of our parliament works for its behalf.

An Oligarch's Case

Simultaneously that the panel on the coalmine case was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case so far, but it seems likely that he may employ the tribunal to fight the penalties the UK imposed on him following the Russian aggression. He has previously started suing Luxembourg on these grounds, claiming sixteen billion dollars: equivalent to half of nation's yearly income. Included in the counsel acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

Trade specialists argue that the EU’s delay in utilising seized oligarchs' funds as security for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over elected governments may be obstructing the finance Ukraine desperately needs.

False Assurances and Growing Threats

The public was told that such things could not occur. Years ago, a former prime minister, championing the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to trade agreement after trade deal and there has not been a case in the past.” A consultant on this issue described critics of “alarmism … the truth is, ISDS barely touches the UK much”. The general impression appeared to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “once firms start to realise the power they now possess, they will turn their attention from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. In the current period, energy and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, opposing – similar to the Whitehaven project – government attempts to prevent global warming. Companies have to date won $114bn through ISDS, of which energy giants have obtained $84bn. That represents the combined GDP