Greetings, Foreign Oligarchs and Companies! Please Proceed and Take Legal Action Against the UK for Billions of Pounds.

Can you understand our system of government works? Perhaps similar to this. Citizens choose MPs. They legislate on bills. When a majority is achieved, the bills become law. The law are enforced by the courts. That's it. Yet, that was how it once functioned. Those days are over.

The Emergence of Shadow Courts

Today, international firms, along with the billionaires behind them, have the power to sue nation states for the laws they pass, at secret arbitration panels composed of corporate lawyers. These proceedings are conducted in secret. Unlike our courts, these bodies allow no right of appeal or oversight by judges. The general public cannot take a case to them, just as our government, or even enterprises operating from this country. They are open solely for entities operating from foreign soil.

Should an arbitration panel finds that a law or policy might diminish the corporation’s expected profits, it can award compensation of hundreds of millions, potentially billions.

These sums constitute not actual losses but money the panel members decide the company would perhaps have made. The government could be forced to rescind the measure. It is deterred from introducing similar legislation along the same lines, for fear of incurring a lawsuit.

A Process Growing Exponentially

Unprecedented levels of legal actions are being filed, as companies take cues from each other, and private equity fund legal actions in return for a portion of the takings. The result? National sovereignty and popular rule are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the rulings made by parliaments is that this provision has been inserted – absent public approval, and typically amid an atmosphere of profound opacity – inside trade treaties.

A Real-World Example: The Whitehaven Coal Mine

A year ago, activists won a great victory at the senior court. The judge found that schemes to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had endorsed the questionable argument that the mine would have zero effect on climate commitments. The incoming administration subsequently revoked the licence the former government had granted. Today, this success faces being overturned by an secret arbitration panel reporting to only the companies bringing the case.

Last August, a company whose beneficial owners reside in the tax haven initiated proceedings against the UK government. Recently a dispute settlement body in Washington DC was set up to consider the case.

The company is suing the UK for the money it would have generated if the mine had received permission to go ahead. We have little idea how much this could amount to. Which individual is representing it against the state? A sitting MP, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The administration makes a decision, the national judiciary upholds it, then a international entity disputes it through an secretive private court, and a elected official works for its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the mining lawsuit was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows little of the case so far, but it appears probable that he’ll use the arbitration process to contest the penalties the UK levied against him subsequent to the invasion of Ukraine. He has already started suing Luxembourg with similar intent, seeking sixteen billion dollars: equivalent to half of government’s yearly income. Among the legal team acting for him in that case? a prominent lawyer, spouse of the previous PM.

Trade specialists argue that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine arises from Belgium’s fear that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, undemocratic power over democratic administrations might be preventing the money Ukraine critically depends on.

False Assurances and Escalating Risks

The public was told that these events were not possible. Years ago, a government leader, promoting the most significant and hazardous of all these agreements, stated: “We’ve signed trade agreement after trade deal and there has never been a issue in the past.” An expert on this issue labelled critics of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “when companies begin to understand the power bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were met with widespread derision.

That warning has come to pass. Recently, fossil fuel and extraction companies have initiated a record number of suits against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – government attempts to halt global warming. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have been awarded $84bn. That is equivalent to the combined GDP