Greetings, Overseas Magnates and Companies! Please Come and Sue the UK for Vast Sums.

What is your perceive our system of government works? Maybe similar to this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. End of story. However, that was how it used to work. No longer.

The Emergence of Offshore Courts

In the modern era, international firms, along with the wealthy individuals that control them, can sue nation states for the policies they pass, at secret arbitration panels composed of business advocates. These proceedings are held behind closed doors. In contrast to domestic courts, these tribunals provide no opportunity to appeal or oversight by judges. You or I cannot take a case to them, nor can our government, or even businesses based in this country. Access is granted only to entities based overseas.

If a tribunal finds that a law or policy may compromise the corporation’s expected profits, it may order compensation of vast sums, even billions.

This compensation are based not on tangible damages but money the tribunal officials determine the company could potentially have made. The state could be forced to abandon its policy. It is hesitant to passing future laws along the same lines, due to the risk of being sued.

A Mechanism Growing Exponentially

Record numbers of legal actions are being brought, as companies learn from each other, and investment funds bankroll lawsuits for a share of a cut of the settlements. The outcome? National sovereignty and popular rule are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump domestic law and the choices taken by legislatures is that this provision has been written – absent public approval, and often in a climate of extreme secrecy – within trade treaties.

A Real-World Example: The Whitehaven Coal Mine

Last year, a conservation group achieved a major legal triumph at the High Court. The judge ruled that proposals to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had endorsed the extraordinary assertion that the mine would have no consequence on our carbon budgets. The new government later cancelled the consent the Tories had issued. Now, this legal outcome is under threat by an foreign court answering to no one but the entities bringing the case.

Last August, a firm whose final controllers are located in the Cayman Islands initiated proceedings versus the UK government. Last week a tribunal in the United States was convened to adjudicate on it.

The claimant is litigating against the UK for the revenue it might have made if the mine had been permitted to go ahead. Citizens have little idea how much this might be. Who is representing it challenging the UK administration? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the domestic court supports it, then a foreign company contests it through an unaccountable private court, and a elected official represents its behalf.

An Oligarch's Lawsuit

Simultaneously 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. We know nothing of the case at present, but it seems likely that he may employ the tribunal to contest the restrictions the UK levied against him following the invasion of Ukraine. He has already started suing a small nation with similar intent, demanding sixteen billion dollars: an amount representing half state's yearly budget. Included in the counsel on his side? a prominent lawyer, married to the previous PM.

Trade specialists believe that the EU’s hesitation in leveraging immobilised Russian assets as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states might be preventing the finance Ukraine urgently requires.

Misleading Claims and Growing Risks

The public was told that such things could not occur. In 2014, a former prime minister, championing the most significant and hazardous of all these agreements, declared: “We’ve signed trade agreement upon trade deal and there has never been a case in the past.” An expert on this topic described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about such legal actions. Predictions that “once firms grasp the influence bestowed upon them, they will shift their focus from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. This year, oil and gas and mining firms have lodged a record number of claims against nations across the economic spectrum, opposing – similar to the Whitehaven project – state efforts to halt climate breakdown. Firms have to date won vast sums via ISDS, of which energy giants have obtained the majority. That equates to the combined GDP