Greetings, International Oligarchs and Companies! Please Come and Sue the UK for Billions of Pounds.

How do you reckon our system of government functions? It could be something like this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills become law. Legislation is upheld by the courts. Simple as that. Yet, that used to be how it used to work. Not anymore.

The Emergence of Offshore Courts

Today, foreign corporations, along with the wealthy individuals behind them, are able to litigate against nation states for the policies they pass, at private courts staffed by business advocates. The cases are conducted away from public scrutiny. Differing from national judiciaries, these bodies allow no avenue for appeal or legal review. Ordinary citizens cannot take a case to them, and neither can our government, including enterprises operating from this country. The door is open exclusively to corporations based overseas.

Should an arbitration panel rules that a legislative action could harm the corporation’s projected profits, it can award damages of vast sums, potentially billions.

These awards constitute not tangible damages but funds the tribunal officials decide the company might otherwise have made. The administration may have to drop the legislation. It is deterred from introducing similar legislation of a similar nature, worried about facing litigation.

A System Growing Exponentially

Historically high figures of cases are being brought, as corporations take cues from each other, and private equity finance suits for a share of a cut of the takings. The result? National sovereignty and popular rule are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the rulings taken by elected bodies is that this clause has been inserted – without public consent, and typically amid a climate of total confidentiality – within trade treaties.

A Specific Instance: The UK Coalmine

Twelve months ago, environmental campaigners won a great victory at the senior court. The judge ruled that schemes to open the first deep coalmine in the UK for a generation, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine would have no consequence on our carbon budgets. The incoming administration subsequently revoked the consent the Tories had approved. Currently, this legal outcome faces being overturned by an offshore tribunal answering to no one but the companies bringing the case.

In August, a firm whose final controllers are located in the Cayman Islands filed a lawsuit against the UK government. Recently a dispute settlement body in the US capital was convened to consider the case.

The claimant is seeking compensation from the UK for the profits it might have made if the mine had been permitted to proceed. We have little idea how much this sum represents. Who is representing it against the UK administration? A member of parliament, and ex-law officer in the Conservative government, the noted patriot Sir Geoffrey Cox. The government enacts a policy, the high court validates it, then a overseas corporation disputes it through an secretive arbitration panel, and a member of our parliament works for its behalf.

The Russian Lawsuit

On the same day that the panel on the coal mine dispute was established, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are scarce of the case at present, but it appears probable that he will utilise the ISDS mechanism to fight the penalties the UK imposed on him following the Russian aggression. He has started suing another European state with similar intent, claiming $16bn: equivalent to half of state's annual revenue. Included in the counsel representing him there? the wife of a former prime minister, married to the previous PM.

International law scholars contend that the EU’s hesitation in using frozen Russian assets as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, secretive influence over elected governments may be obstructing the funds Ukraine urgently requires.

False Assurances and Growing Costs

The public was told that these events were not possible. In 2014, a former prime minister, advocating for the largest and riskiest of all such treaties, declared: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” An adviser on this issue labelled critics of “alarmism … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about these lawsuits. Predictions that “when companies begin to understand the influence bestowed upon them, they will turn their attention from the poorer states to the developed economies” were greeted by scepticism.

That warning is now a reality. Recently, oil and gas and mining firms have lodged a historic level of suits against nations across the economic spectrum, contesting – similar to the Whitehaven project – state efforts to prevent environmental catastrophe. Companies have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP