Greetings, International Oligarchs and Firms! Kindly Come and Take Legal Action Against the UK for Billions.

Can you perceive our political system functions? Maybe along the lines of this. Citizens choose MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. That's it. However, that was how it used to work. No longer.

The Rise of Shadow Courts

Nowadays, international firms, and the wealthy individuals behind them, have the power to sue nation states for the policies they pass, at offshore tribunals staffed by commercial attorneys. Such disputes take place in secret. Unlike our courts, these bodies provide no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, and neither can our government, including enterprises headquartered in this country. Access is granted solely for entities registered abroad.

When a secret court determines that a law or policy might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, running into billions.

These sums are based not on tangible damages but funds the panel members decide the company might otherwise have made. The state may have to abandon its policy. It is deterred from introducing similar legislation in that area, due to the risk of being sued.

A Process Running Rampant

Record numbers of disputes are being filed, as companies observe each other, and private equity fund legal actions in exchange for a portion of the takings. The result? National sovereignty and democracy are turning into unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the choices enacted by parliaments is that this clause has been inserted – without democratic mandate, and often in an atmosphere of total confidentiality – inside trade treaties.

A Concrete Example: The Whitehaven Coalmine

A year ago, environmental campaigners won a great victory at the high court. The presiding officer ruled that proposals to dig the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have no impact on climate commitments. The new government subsequently revoked the consent the former government had granted. Currently, this victory faces being overturned by an foreign court answering to only the companies bringing the case.

Last August, a firm whose ultimate owners are based in the tax haven initiated proceedings challenging the UK government. Recently a arbitration panel in Washington DC was convened to hear it.

This firm is litigating against the UK for the revenue it might have made if the mine had been allowed to go ahead. The public has no clear indication how much this sum represents. Which individual is acting on its behalf against the state? A member of parliament, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The government makes a decision, the domestic court supports it, then a international entity challenges it through an secretive offshore tribunal, and a sitting MP works for its behalf.

A Sanctions Lawsuit

Simultaneously that the tribunal on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows little of the case to date, but it seems likely that he’ll use the tribunal to fight the restrictions the UK enacted against him after the Russian aggression. He has started suing a small nation on these grounds, demanding sixteen billion dollars: half that government’s annual revenue. Part of the counsel representing him there? the wife of a former prime minister, spouse of the former British prime minister.

Legal experts argue that the EU’s delay in using frozen state funds as collateral for its financial support package stems from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over democratic administrations may be obstructing the funds Ukraine desperately needs.

Misleading Claims and Mounting Costs

The public was told that such things could not occur. In 2014, a senior politician, championing the biggest and most dangerous of all such treaties, stated: “Britain has agreed to investment treaty after trade deal and there has not been a case in the past.” A consultant on this topic labelled activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that exclusively weaker states needed to fear ISDS claims. Cautionary notes that “when companies begin to understand the influence they’ve been granted, they will turn their attention from the weak nations to the developed economies” were met with widespread derision.

That warning has come to pass. In the current period, oil and gas and extraction companies have filed a historic level of suits against nations rich and poor, opposing – similar to the Whitehaven project – official measures to stop environmental catastrophe. Firms have thus far won $114bn through ISDS, of which energy giants have secured $84bn. That represents the combined GDP