Welcome, International Magnates and Firms! Please Proceed and Take Legal Action Against the UK for Vast Sums.

What is your perceive our system of government functions? It could be something like this. Citizens choose MPs. They vote on bills. When a majority is obtained, the bills become law. Statutes is maintained by the courts. Simple as that. Yet, that was how it operated in the past. Not anymore.

The Emergence of Offshore Courts

Today, international firms, and the billionaires who own them, have the power to sue governments for the laws they pass, at secret arbitration panels made up of business advocates. The cases are conducted behind closed doors. Differing from national judiciaries, these bodies provide no avenue for appeal or legal review. You or I cannot take a case to them, and neither can our government, or even businesses operating from this country. The door is open solely for entities registered abroad.

When a secret court determines that a law or policy may compromise the corporation’s anticipated profits, it may order damages of hundreds of millions, potentially billions.

These sums constitute not tangible damages but money the panel members conclude the company could potentially have made. The state could be forced to drop the legislation. It becomes hesitant to enacting future policies in that area, worried about incurring a lawsuit.

A Mechanism Growing Exponentially

Unprecedented levels of cases are being brought, as firms observe each other, and private equity finance suits in return for a portion of the awards. The consequence? Democratic sovereignty and democracy are turning into too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the choices taken by elected bodies is that this clause has been incorporated – without public consent, and frequently under an atmosphere of total confidentiality – inside bilateral investment treaties.

A Concrete Example: The UK Coalmine

Last year, activists won a great victory at the senior court. The presiding officer found that plans to open the first major coal mine in the UK for 30 years, in Cumbria, were wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine would have zero effect on our carbon budgets. The incoming administration later cancelled the consent the previous administration had granted. Now, this victory faces being overturned by an foreign court answering to only the companies filing the suit.

During August, a company whose beneficial owners are located in the tax haven initiated proceedings against the UK government. Recently a arbitration panel in the US capital was convened to consider the case.

This firm is suing the UK for the money it might have made if the mine had been permitted to go ahead. Citizens have no idea how much this might be. What legal team is representing it challenging the British government? A sitting MP, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government enacts a policy, the high court validates it, then a foreign company contests it through an secretive private court, and a sitting MP represents its behalf.

A Sanctions Case

Simultaneously that the panel on the coalmine case was convened, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. Details are nothing of the case so far, but it is highly possible that he’ll use the tribunal to fight the sanctions the UK levied against him after the Russian aggression. He has filed a claim against Luxembourg for this reason, seeking sixteen billion dollars: equivalent to half of government’s yearly income. Part of the lawyers on his side? a prominent lawyer, spouse of the ex-UK leader.

International law scholars believe that the EU’s delay in leveraging immobilised Russian assets as security for its financial support package arises from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over democratic administrations may be obstructing the finance Ukraine desperately needs.

Misleading Claims and Escalating Costs

The public was told that these events wouldn’t happen. Previously, a government leader, advocating for the largest and riskiest of all investment pacts, told us: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” An expert on this issue described critics of “alarmism … the fact is, ISDS barely touches the UK much”. The general impression seemed to be that only poorer nations had to worry about such legal actions. Warnings that “when companies begin to understand the power they’ve been granted, they will turn their attention from the weak nations to the strong ones” were met with general mockery.

That warning has come to pass. This year, oil and gas and resource corporations have filed a unprecedented number of claims against nations both wealthy and developing, opposing – like the example of the Whitehaven project – state efforts to stop global warming. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have obtained $84bn. That represents the combined GDP