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

Can you reckon our system of government works? It could be along the lines of this. The public votes for MPs. They legislate on bills. When a majority is secured, the bills become law. Legislation is maintained by the courts. That's it. However, that’s how it operated in the past. Not anymore.

The Emergence of Offshore Tribunals

In the modern era, foreign corporations, along with the billionaires who own them, are able to litigate against governments for the policies they pass, at private courts composed of corporate lawyers. Such disputes are held away from public scrutiny. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. The general public are unable to file a case to them, nor can our government, or even companies operating from this country. Access is granted only to entities operating from foreign soil.

When a secret court rules that a legislative action could harm the corporation’s expected profits, it has the power to grant financial penalties of hundreds of millions, even billions.

These sums are based not on tangible damages but money the tribunal officials decide the company could potentially have made. The state may have to abandon its policy. It will be deterred from introducing similar legislation in that area, for fear of incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being brought, as firms take cues from each other, and private equity bankroll lawsuits for a share of a share of the settlements. The consequence? Sovereignty and democratic governance are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The explanation it can trump domestic law and the rulings taken by elected bodies is that this clause has been incorporated – absent public approval, and often in an atmosphere of extreme secrecy – within trade treaties.

A Specific Example: The Cumbrian Coalmine

A year ago, a conservation group won a great victory at the high court. The presiding officer determined that proposals to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine would have no impact on our carbon budgets. The incoming administration then withdrew the consent the Tories had issued. Currently, this legal outcome faces being overturned by an offshore tribunal accountable to only the corporations bringing the case.

In August, a company whose ultimate owners are located in the Cayman Islands filed a lawsuit against the UK government. Last week a dispute settlement body in the US capital was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to proceed. We have no clear indication how much this could amount to. What legal team is representing it in opposition to the British government? A member of parliament, and previous senior legal advisor in the previous government, that great patriot Sir Geoffrey Cox. The government enacts a policy, the high court upholds it, then a international entity disputes it through an undemocratic private court, and a sitting MP acts on its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was appointed, 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 little of the case so far, but it is highly possible that he’ll use the tribunal to contest the sanctions the UK levied against him following the invasion of Ukraine. He has previously started suing another European state on these grounds, demanding a colossal sum: equivalent to half of nation's yearly income. Among the lawyers acting for him in that case? Cherie Blair, wife of the ex-UK leader.

Trade specialists contend that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a trade agreement. This extraordinary, secretive influence over elected governments may be obstructing the money Ukraine urgently requires.

Misleading Claims and Escalating Costs

Politicians promised that these scenarios wouldn’t happen. Years ago, a government leader, championing the largest and riskiest of all such treaties, declared: “The UK has signed trade deal upon trade deal and there has not been a problem in the past.” An expert on this topic described critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by these lawsuits. Warnings that “when companies start to realise the influence they’ve been granted, they will redirect their efforts from the weak nations to the wealthy nations” were dismissed with widespread derision.

That threat is now a reality. This year, oil and gas and resource corporations have lodged a historic level of claims against nations rich and poor, opposing – similar to the Cumbrian coalmine – state efforts to halt global warming. Firms have thus far won $114bn by using ISDS, of which energy giants have obtained the majority. That equates to the combined GDP