Greetings, Foreign Oligarchs and Companies! Kindly Proceed and Take Legal Action Against the UK for Billions of Pounds.

Can you perceive our system of government operates? Maybe similar to this. We elect MPs. They legislate on bills. When a majority is achieved, the bills become law. Statutes are enforced by the courts. End of story. However, that’s how it once functioned. Those days are over.

The Emergence of Shadow Arbitration Panels

In the modern era, international firms, and the billionaires who own them, can sue elected administrations for the policies they pass, at private courts composed of business advocates. Such disputes take place in secret. Unlike our courts, these panels provide no right of appeal or legal review. You or I cannot take a case to them, nor can our government, including companies headquartered in this country. The door is open solely for businesses based overseas.

When a secret court determines that a government measure could harm the corporation’s anticipated profits, it has the power to grant damages of vast sums, potentially billions.

These awards constitute not real financial harm but compensation the panel members decide the company could potentially have made. The administration may have to rescind the measure. It is hesitant to passing future laws in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of disputes are being filed, as firms take cues from each other, and hedge funds fund legal actions in return for a cut of the settlements. The outcome? Sovereignty and popular rule are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it can override national legislation and the choices enacted by parliaments is that this stipulation has been inserted – without democratic mandate, and frequently under an atmosphere of total confidentiality – within bilateral investment treaties.

A Real-World Case: The Whitehaven Coalmine

A year ago, activists secured a significant win at the senior court. The justice ruled that plans to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had agreed to the questionable argument that the mine would have no consequence on climate commitments. The incoming administration later cancelled the permission the former government had granted. Today, this legal outcome is under threat by an offshore tribunal accountable to exclusively the companies filing the suit.

In August, a corporate entity whose ultimate owners reside in the tax haven filed a lawsuit against the UK government. Recently a arbitration panel in the US capital was set up to adjudicate on it.

The company is litigating against the UK for the revenue it could have earned if the mine had been permitted to go ahead. The public has no clear indication how much this could amount to. Which individual is serving as its counsel in opposition to the British government? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot the MP. The government passes a law, the domestic court supports it, then a foreign company disputes it through an unaccountable arbitration panel, and a elected official represents its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the coal mine dispute was established, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows nothing of the case at present, but it seems likely that he will utilise the arbitration process to fight the restrictions the UK levied against him subsequent to the war in Ukraine. He has already initiated proceedings against another European state with similar intent, seeking $16bn: equivalent to half of nation's yearly income. Included in the legal team acting for him in that case? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts contend that the EU’s procrastination in using frozen oligarchs' funds as security for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a investment pact. This unprecedented, secretive influence over democratic administrations could be blocking the finance Ukraine urgently requires.

Empty Promises and Mounting Threats

Politicians promised that these scenarios wouldn’t happen. Previously, a former prime minister, championing the biggest and most dangerous of all investment pacts, declared: “The UK has signed investment treaty upon trade deal and we have never seen a issue in the past.” A consultant on this topic labelled campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by these lawsuits. Warnings that “as corporations begin to understand the influence they’ve been granted, they will redirect their efforts from the poorer states to the developed economies” were dismissed with widespread derision.

That warning has come to pass. Recently, energy and mining firms have filed a record number of suits against nations across the economic spectrum, opposing – like the example of the UK mine – state efforts to stop environmental catastrophe. Companies have to date won vast sums via ISDS, of which energy giants have been awarded $84bn. That represents the combined GDP