Greetings, Overseas Magnates and Companies! Please Come and Sue the UK for Billions of Pounds.

How do you perceive our democratic process operates? Maybe along the lines of this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills pass into law. Legislation is maintained by the courts. Simple as that. Yet, that was how it once functioned. Those days are over.

The Emergence of Secret Courts

Nowadays, international firms, and the wealthy individuals that control them, have the power to sue nation states for the policies they pass, at private courts staffed by commercial attorneys. The cases are held away from public scrutiny. Unlike our courts, these bodies provide no avenue for appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even enterprises headquartered in this country. Access is granted solely for entities operating from foreign soil.

Should an arbitration panel finds that a government measure may compromise the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

These awards represent not real financial harm but money the panel members decide the company would perhaps have made. The administration may have to abandon its policy. It will be deterred from passing future laws along the same lines, due to the risk of incurring a lawsuit.

A System Spiralling Out of Control

Record numbers of legal actions are being filed, as firms observe each other, and hedge funds fund legal actions in return for a share of the awards. The outcome? Democratic sovereignty and popular rule are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the decisions made by elected bodies is that this provision has been incorporated – without democratic mandate, and often in a climate of total confidentiality – within trade treaties.

A Specific Instance: The UK Coal Mine

A year ago, a conservation group won a great victory at the senior court. The judge determined that schemes to excavate the first major coal mine in the UK for 30 years, in Cumbria, had been unlawfully approved by the Conservative government, which had endorsed the bizarre claim that the mine could have no impact on national carbon targets. The incoming administration subsequently revoked the licence the Tories had granted. Today, this success is under threat by an secret arbitration panel reporting to only the entities filing the suit.

In August, a company whose final controllers are located in the offshore financial centre lodged a claim versus the UK government. The previous week a dispute settlement body in Washington DC was established to hear it.

The company is suing the UK for the profits it might have made if the mine had received permission to proceed. The public has no clear indication how much this might be. What legal team is serving as its counsel in opposition to the British government? A member of parliament, and previous senior legal advisor in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court supports it, then a overseas corporation disputes it through an secretive private court, and a member of our parliament represents its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the coal mine dispute was convened, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case to date, but it seems likely that he will utilise the tribunal to challenge the sanctions the UK enacted against him following the war in Ukraine. He has previously filed a claim against another European state for this reason, seeking sixteen billion dollars: equivalent to half of nation's annual revenue. Part of the lawyers representing him there? the wife of a former prime minister, married to the former British prime minister.

International law scholars believe that the EU’s procrastination in leveraging immobilised state funds as collateral for its loan to Ukraine arises from apprehension in Brussels that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments may be obstructing the money Ukraine desperately needs.

False Assurances and Growing Risks

The public was told that these scenarios could not occur. Years ago, a former prime minister, advocating for the largest and riskiest of all such treaties, stated: “The UK has signed trade deal upon trade deal and there has never been a issue in the past.” An expert on this matter described critics of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that exclusively weaker states needed to fear ISDS claims. Warnings that “once firms grasp the authority they’ve been granted, they will turn their attention from the weak nations to the wealthy nations” were met with scepticism.

That threat is now a reality. This year, energy and resource corporations have initiated a record number of suits against nations rich and poor, contesting – similar to the Cumbrian coalmine – government attempts to halt global warming. Corporations have thus far won vast sums via ISDS, of which energy giants have secured the majority. That equates to the combined GDP