Greetings, International Tycoons and Firms! Kindly Proceed and Litigate Against the UK for Billions.

What is your perceive our democratic process functions? Maybe along the lines of this. Citizens choose MPs. They debate and pass bills. When a majority is achieved, the bills become law. Legislation is upheld by the courts. End of story. Yet, that’s how it once functioned. Those days are over.

The Advent of Secret Arbitration Panels

Nowadays, foreign corporations, along with the billionaires who own them, have the power to sue elected administrations for the policies they pass, at offshore tribunals composed of business advocates. The cases take place in secret. In contrast to domestic courts, these panels provide no right of appeal or judicial review. The general public are unable to file a case to them, just as our government, including enterprises based in this country. They are open only to corporations operating from foreign soil.

If a tribunal finds that a government measure may compromise the corporation’s projected profits, it can award damages of hundreds of millions of pounds, potentially billions.

These sums represent not actual losses but money the arbitrators conclude the company would perhaps have made. The state might be compelled to abandon its policy. It is hesitant to introducing similar legislation along the same lines, worried about facing litigation.

A Mechanism Growing Exponentially

Unprecedented levels of legal actions are being initiated, as corporations learn from each other, and investment funds finance suits for a share of a share of the takings. The consequence? National sovereignty and popular rule are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the decisions made by parliaments is that this stipulation has been inserted – without public consent, and typically amid conditions of extreme secrecy – inside international trade agreements.

A Concrete Case: 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 a generation, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had agreed to the bizarre claim that the mine would have no consequence on climate commitments. The Labour government then withdrew the permission the former government had approved. Now, this victory faces being overturned by an secret arbitration panel reporting to exclusively the entities bringing the case.

Last August, a corporate entity whose final controllers reside in the offshore financial centre lodged a claim challenging the UK government. Last week a arbitration panel in the US capital was convened to consider the case.

The claimant is litigating against the UK for the profits it could have earned if the mine had been allowed to commence operations. We have no clear indication how much this sum represents. What legal team is representing it against the state? A sitting MP, and previous senior legal advisor in the previous government, that great patriot the MP. The government passes a law, the high court supports it, then a international entity challenges it through an secretive offshore tribunal, and a elected official works for its behalf.

The Russian Challenge

On the same day that the panel on the mining lawsuit was appointed, information emerged from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it seems likely that he will utilise the arbitration process to contest the penalties the UK levied against him following the invasion of Ukraine. He has started suing another European state on these grounds, seeking $16bn: half that nation's annual revenue. Part of the lawyers acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Trade specialists believe that the EU’s hesitation in leveraging immobilised state funds as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This unprecedented, undemocratic power over sovereign states may be obstructing the finance Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these events wouldn’t happen. Years ago, a former prime minister, advocating for the largest and riskiest of all these agreements, declared: “The UK has signed trade deal after trade deal and there has not been a case in the past.” An expert on this issue labelled activists of “scaremongering … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about ISDS claims. Warnings that “when companies start to realise the power they’ve been granted, they will turn their attention from the poorer states to the strong ones” were met with general mockery.

That warning has now materialised. In the current period, energy and resource corporations have lodged a record number of cases against nations both wealthy and developing, opposing – similar to the UK mine – government attempts to stop global warming. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP