Hello, Foreign Tycoons and Companies! Kindly Come and Litigate Against the UK for Billions.

Can you understand our democratic process functions? It could be along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. Well, that was how it used to work. No longer.

The Rise of Secret Courts

Today, international firms, along with the billionaires that control them, have the power to sue governments for the policies they pass, at private courts staffed by corporate lawyers. Such disputes are held away from public scrutiny. Differing from national judiciaries, these bodies provide no right of appeal or oversight by judges. Ordinary citizens are unable to file a case to them, just as our government, or even enterprises operating from this country. They are open solely for businesses operating from foreign soil.

When a secret court determines that a government measure could harm the corporation’s anticipated profits, it may order compensation of vast sums, running into billions.

This compensation represent not real financial harm but funds the panel members conclude the company would perhaps have made. The administration might be compelled to rescind the measure. It will be hesitant to passing future laws of a similar nature, due to the risk of incurring a lawsuit.

A Process Growing Exponentially

Record numbers of disputes are being initiated, as companies observe each other, and investment funds finance suits in return for a portion of the settlements. The outcome? Sovereignty and democratic governance are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the rulings enacted by parliaments is that this stipulation has been written – without democratic mandate, and typically amid an atmosphere of extreme secrecy – within trade treaties.

A Concrete Instance: The Cumbrian Coalmine

Last year, a conservation group achieved a major legal triumph at the senior court. The presiding officer ruled that schemes to open the first major coal mine in the UK for a generation, in northwest England, were found to be wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine would have no impact on our carbon budgets. The incoming administration then withdrew the permission the previous administration had granted. Today, this victory could be compromised by an offshore tribunal reporting to no one but the companies filing the suit.

In August, a firm whose final controllers are located in the tax haven filed a lawsuit challenging the UK government. Recently a tribunal in the United States was established to hear it.

This firm is litigating against the UK for the profits it would have generated if the mine had been permitted to go ahead. We have little idea how much this could amount to. What legal team is serving as its counsel in opposition to the British government? An elected representative, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state makes a decision, the high court validates it, then a international entity disputes it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

The Russian Challenge

Concurrently that the panel on the mining lawsuit was established, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case to date, but it seems likely that he’ll use the arbitration process to challenge the restrictions the UK enacted against him after the Russian aggression. He has initiated proceedings against Luxembourg for this reason, seeking $16bn: an amount representing half nation's yearly budget. Among the lawyers acting for him in that case? Cherie Blair, spouse of the previous PM.

Trade specialists contend that the EU’s delay in using frozen state funds as security for its financial support package is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over democratic administrations could be blocking the money Ukraine desperately needs.

Empty Promises and Mounting Risks

Politicians promised that these scenarios wouldn’t happen. Years ago, a former prime minister, championing the biggest and most dangerous of all investment pacts, declared: “Britain has agreed to trade deal upon trade deal and there has never been a case in the past.” An expert on this topic described critics of “exaggeration … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “once firms start to realise the influence bestowed upon them, they will shift their focus from the weak nations to the strong ones” were met with widespread derision.

That warning has now materialised. This year, fossil fuel and resource corporations have filed a record number of suits against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – state efforts to halt global warming. Firms have thus far won $114bn via ISDS, of which oil majors have been awarded the majority. That represents the combined GDP