Greetings, International Oligarchs and Corporations! Kindly Come and Sue the UK for Vast Sums.

What is your reckon our democratic process functions? It could be something like this. The public votes for MPs. They vote on bills. If a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. Simple as that. Yet, that’s how it used to work. Not anymore.

The Rise of Offshore Courts

Today, international firms, and the billionaires behind them, are able to litigate against governments for the regulations they pass, at secret arbitration panels composed of commercial attorneys. These proceedings are held in secret. Unlike our courts, these tribunals provide no right of appeal or judicial review. You or I cannot take a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted only to corporations operating from foreign soil.

Should an arbitration panel finds that a law or policy might diminish the corporation’s anticipated profits, it may order financial penalties of vast sums, running into billions.

These sums constitute not actual losses but money the tribunal officials decide the company could potentially have made. The government might be compelled to rescind the measure. It is discouraged from introducing similar legislation along the same lines, due to the risk of facing litigation.

A Mechanism Running Rampant

Record numbers of disputes are being filed, as corporations learn from each other, and investment funds finance suits in exchange for a share of the settlements. The result? Sovereignty and popular rule are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede a country's own laws and the rulings enacted by parliaments is that this stipulation has been written – absent public approval, and frequently under an atmosphere of profound opacity – into bilateral investment treaties.

A Concrete Example: The UK Coal Mine

A year ago, activists secured a significant win at the high court. The presiding officer found that proposals to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine would have had zero effect on national carbon targets. The incoming administration then withdrew the consent the Tories had approved. Now, this victory is under threat by an secret arbitration panel answering to no one but the entities petitioning it.

During August, a firm whose ultimate owners are based in the tax haven filed a lawsuit challenging the UK government. The previous week a arbitration panel in Washington DC was established to consider the case.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to go ahead. We have no idea how much this might be. Which individual is representing it against the UK administration? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The state passes a law, the high court supports it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Case

Simultaneously that the court on the coal mine dispute was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case to date, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK imposed on him following the Russian aggression. He has previously initiated proceedings against another European state for this reason, demanding sixteen billion dollars: half that state's annual revenue. Part of the lawyers acting for him in that case? the wife of a former prime minister, married to the previous PM.

Trade specialists believe that the EU’s procrastination in leveraging immobilised oligarchs' funds as security for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states might be preventing the funds Ukraine desperately needs.

False Assurances and Growing Threats

Politicians promised that these scenarios could not occur. Years ago, a former prime minister, championing the biggest and most dangerous of all such treaties, told us: “Britain has agreed to investment treaty upon trade deal and there has not been a problem in the past.” A consultant on this matter labelled campaigners of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that exclusively weaker states should be concerned by such legal actions. Warnings that “as corporations begin to understand the authority bestowed upon them, they will shift their focus from the weak nations to the wealthy nations” were dismissed with widespread derision.

That prediction is now a reality. In the current period, fossil fuel and mining firms have filed a unprecedented number of suits against nations across the economic spectrum, challenging – as in the case of the UK mine – official measures to prevent environmental catastrophe. Firms have so far won $114bn by using ISDS, of which energy giants have secured $84bn. That equates to the combined GDP