Welcome, International Tycoons and Firms! Please Proceed and Sue the UK for Billions of Pounds.

How do you understand our political system works? Perhaps similar to this. Citizens choose MPs. They vote on bills. If a majority is achieved, the bills pass into law. The law is maintained by the courts. End of story. Yet, that was how it used to work. Not anymore.

The Emergence of Offshore Tribunals

Nowadays, foreign corporations, or the billionaires who own them, have the power to sue nation states for the policies they pass, at secret arbitration panels composed of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these panels allow no right of appeal or judicial review. You or I cannot take a case to them, nor can our government, including businesses headquartered in this country. They are open only to businesses operating from foreign soil.

Should an arbitration panel determines that a government measure may compromise the corporation’s projected profits, it can award financial penalties of vast sums, even billions.

These sums constitute not real financial harm but funds the tribunal officials conclude the company would perhaps have made. The government may have to drop the legislation. It becomes discouraged from passing future laws of a similar nature, for fear of being sued.

A System Running Rampant

Record numbers of cases are being brought, as companies observe each other, and investment funds finance suits in exchange for a share of the awards. The consequence? Sovereignty and democracy are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump domestic law and the decisions enacted by elected bodies is that this stipulation has been written – without public consent, and frequently under a climate of extreme secrecy – within bilateral investment treaties.

A Real-World Instance: The Cumbrian Coal Mine

Twelve months ago, activists achieved a major legal triumph at the High Court. The justice determined that proposals to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine could have no impact on national carbon targets. The new government later cancelled the permission the previous administration had approved. Today, this legal outcome is under threat by an foreign court reporting to only the entities filing the suit.

Last August, a firm whose final controllers are based in the tax haven lodged a claim challenging the UK government. The previous week a dispute settlement body in the United States was established to consider the case.

This firm is litigating against the UK for the profits it might have made if the mine had been permitted to go ahead. We have no clear indication how much this could amount to. Which individual is serving as its counsel challenging the UK administration? An elected representative, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The government makes a decision, the high court upholds it, then a foreign company disputes it through an secretive offshore tribunal, and a member of our parliament acts on its behalf.

The Russian Lawsuit

On the same day that the tribunal on the coal mine dispute was convened, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. Details are scarce of the case to date, but it appears probable that he will utilise the arbitration process to fight the restrictions the UK enacted against him following the war in Ukraine. He has previously filed a claim against Luxembourg on these grounds, seeking $16bn: half that state's annual revenue. Part of the counsel acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

International law scholars believe that the EU’s procrastination in using frozen oligarchs' funds as security for its loan to Ukraine is due to apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations might be preventing the finance Ukraine critically depends on.

Misleading Claims and Escalating Threats

The public was told that such things were not possible. Years ago, a government leader, advocating for the biggest and most dangerous of all such treaties, told us: “We’ve signed trade agreement after trade deal and there has never been a case in the past.” An expert on this issue labelled campaigners of “alarmism … the fact is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about such legal actions. Warnings that “as corporations begin to understand the influence they now possess, they will shift their focus from the poorer states to the developed economies” were dismissed with scepticism.

That threat has now materialised. Recently, oil and gas and extraction companies have filed a historic level of cases against nations across the economic spectrum, opposing – similar to the UK mine – official measures to prevent environmental catastrophe. Companies have thus far won vast sums via ISDS, of which oil majors have obtained the majority. That is equivalent to the combined GDP