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

What is your perceive our political system functions? Perhaps similar to this. Citizens choose MPs. They vote on bills. If a majority is obtained, the bills pass into law. Legislation are enforced by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Emergence of Secret Courts

Today, international firms, and the wealthy individuals behind them, have the power to sue nation states for the regulations they pass, at offshore tribunals composed of business advocates. The cases are conducted behind closed doors. Differing from national judiciaries, these tribunals allow no opportunity to appeal or judicial review. The general public cannot take a case to them, just as our government, or even businesses based in this country. They are open solely for corporations operating from foreign soil.

When a secret court determines that a law or policy might diminish the corporation’s projected profits, it may order compensation of vast sums, potentially billions.

This compensation constitute not tangible damages but money the panel members determine the company could potentially have made. The administration could be forced to abandon its policy. It is hesitant to enacting future policies in that area, due to the risk of facing litigation.

A Process Running Rampant

Unprecedented levels of cases are being initiated, as corporations take cues from each other, and investment funds fund legal actions for a share of a portion of the settlements. The result? Democratic sovereignty and popular rule are turning into too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the rulings taken by parliaments is that this provision has been incorporated – without public consent, and frequently under an atmosphere of extreme secrecy – inside trade treaties.

A Real-World Case: The Whitehaven Coal Mine

A year ago, a conservation group secured a significant win at the senior court. The presiding officer determined that proposals to excavate the first major coal mine in the UK for a generation, in northwest England, had been illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine could have zero effect on climate commitments. The new government subsequently revoked the permission the previous administration had issued. Now, this victory could be compromised by an secret arbitration panel accountable to only the entities bringing the case.

During August, a company whose final controllers are located in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the United States was convened to consider the case.

This firm is suing the UK for the profits it would have generated if the mine had been allowed to commence operations. We have no idea how much this might be. Who is acting on its behalf in opposition to the British government? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot the MP. The state makes a decision, the high court validates it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

A Sanctions Case

On the same day that the court on the coalmine case was established, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. We know nothing of the case at present, but it seems likely that he’ll use the ISDS mechanism to contest the penalties the UK levied against him after the war in Ukraine. He has previously filed a claim against another European state with similar intent, demanding a colossal sum: equivalent to half of government’s yearly budget. Part of the lawyers on his side? Cherie Blair, married to the previous PM.

International law scholars believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as guarantee for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a investment pact. This unprecedented, undemocratic power over democratic administrations might be preventing the money Ukraine urgently requires.

Empty Promises and Mounting Risks

Politicians promised that these scenarios were not possible. Previously, a government leader, promoting the biggest and most dangerous of all investment pacts, told us: “Britain has agreed to investment treaty after trade deal and we have never seen a case in the past.” A consultant on this issue labelled critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states needed to fear such legal actions. Warnings that “when companies start to realise the power they now possess, they will turn their attention from the vulnerable countries to the developed economies” were greeted by widespread derision.

That warning is now a reality. Recently, energy and resource corporations have initiated a unprecedented number of cases against nations across the economic spectrum, contesting – like the example of the UK mine – official measures to prevent climate breakdown. Corporations have so far won $114bn by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP