Hello, Overseas Magnates and Firms! Kindly Come and Sue the UK for Billions of Pounds.

How do you reckon our democratic process operates? Maybe similar to this. The public votes for MPs. They vote on bills. When a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. However, that used to be how it used to work. No longer.

The Emergence of Shadow Tribunals

Nowadays, foreign corporations, along with the wealthy individuals that control them, are able to litigate against nation states for the regulations they pass, at offshore tribunals made up of business advocates. Such disputes are conducted away from public scrutiny. Differing from national judiciaries, these panels provide no right of appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even companies operating from this country. They are open solely for businesses based overseas.

When a secret court rules that a government measure might diminish the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions of pounds, potentially billions.

These sums are based not on real financial harm but compensation the arbitrators determine the company would perhaps have made. The administration might be compelled to rescind the measure. It becomes hesitant to passing future laws of a similar nature, for fear of facing litigation.

A System Growing Exponentially

Historically high figures of legal actions are being initiated, as corporations observe each other, and hedge funds bankroll lawsuits in return for a cut of the takings. The outcome? Sovereignty and popular rule are turning into prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump national legislation and the rulings enacted by legislatures is that this provision has been incorporated – absent public approval, and often in an atmosphere of total confidentiality – within bilateral investment treaties.

A Specific Instance: The Cumbrian Coal Mine

A year ago, environmental campaigners secured a significant win at the high court. The presiding officer found that schemes to dig the first major coal mine in the UK for a generation, in northwest England, were illegally sanctioned by the previous government, which had endorsed the bizarre claim that the mine could have no consequence on national carbon targets. The incoming administration later cancelled the licence the previous administration had approved. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to no one but the corporations petitioning it.

In August, a firm whose ultimate owners are based in the offshore financial centre lodged a claim challenging the UK government. Last week a arbitration panel in Washington DC was set up to consider the case.

The company is litigating against the UK for the profits it would have generated if the mine had received permission to commence operations. The public has no idea how much this might be. What legal team is representing it challenging the British government? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government enacts a policy, the high court supports it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a sitting MP acts on its behalf.

The Russian Challenge

On the same day that the tribunal on the coal mine dispute was appointed, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case at present, but it appears probable that he’ll use the arbitration process to challenge the penalties the UK enacted against him following the Russian aggression. He has previously filed a claim against a small nation for this reason, seeking a colossal sum: an amount representing half nation's annual revenue. Among the legal team on his side? a prominent lawyer, spouse of the ex-UK leader.

International law scholars contend that the EU’s procrastination in using frozen oligarchs' funds as security for its financial support package is due to apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the money Ukraine urgently requires.

Misleading Claims and Escalating Threats

The public was told that these scenarios could not occur. Previously, a former prime minister, promoting the biggest and most dangerous of all investment pacts, declared: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this matter described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message appeared to be that exclusively weaker states needed to fear ISDS claims. Cautionary notes that “when companies begin to understand the authority they now possess, they will redirect their efforts from the poorer states to the strong ones” were greeted by scepticism.

That threat is now a reality. Recently, fossil fuel and resource corporations have filed a historic level of claims against nations both wealthy and developing, opposing – similar to the Whitehaven project – state efforts to prevent environmental catastrophe. Firms have so far won $114bn through ISDS, of which oil majors have been awarded eighty-four billion dollars. That equates to the combined GDP