Welcome, Foreign Tycoons and Corporations! Please Proceed and Sue the UK for Vast Sums.

What is your perceive our political system functions? Perhaps something like this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. However, that was how it operated in the past. No longer.

The Rise of Shadow Tribunals

In the modern era, foreign corporations, or the oligarchs that control them, have the power to sue nation states for the policies they pass, at private courts made up of commercial attorneys. Such disputes are held away from public scrutiny. In contrast to domestic courts, these tribunals grant no avenue for appeal or judicial review. The general public are unable to file a case to them, just as our government, including businesses operating from this country. Access is granted solely for entities operating from foreign soil.

When a secret court finds that a government measure might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions, running into billions.

These sums constitute not actual losses but money the panel members decide the company might otherwise have made. The government could be forced to abandon its policy. It will be hesitant to introducing similar legislation in that area, worried about facing litigation.

A Process Running Rampant

Historically high figures of legal actions are being brought, as corporations learn from each other, and private equity bankroll lawsuits in return for a cut of the settlements. The result? Democratic sovereignty and democracy are turning into prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the choices taken by elected bodies is that this stipulation has been inserted – absent public approval, and frequently under a climate of extreme secrecy – inside international trade agreements.

A Specific Instance: The UK Coal Mine

Last year, a conservation group won a great victory at the senior court. The justice found that plans to excavate the first deep coalmine in the UK for a generation, in northwest England, had been illegally sanctioned by the previous government, which had accepted the bizarre claim that the mine would have had no impact on national carbon targets. The new government then withdrew the consent the Tories had issued. Now, this legal outcome faces being overturned by an foreign court answering to exclusively the companies bringing the case.

Last August, a corporate entity whose ultimate owners are located in the offshore financial centre filed a lawsuit against the UK government. Last week a arbitration panel in Washington DC was set up to consider the case.

The company is seeking compensation from the UK for the profits it might have made if the mine had been allowed to proceed. We have little idea how much this sum represents. Which individual is acting on its behalf in opposition to the UK administration? A sitting MP, and ex-law officer in the previous government, the noted patriot the MP. The government enacts a policy, the national judiciary supports it, then a overseas corporation challenges it through an secretive offshore tribunal, and a elected official works for its behalf.

An Oligarch's Case

On the same day that the tribunal on the mining lawsuit was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know little of the case so far, but it appears probable that he may employ the tribunal to contest the sanctions the UK enacted against him subsequent to the Russian aggression. He has already started suing Luxembourg for this reason, claiming sixteen billion dollars: an amount representing half state's yearly income. Included in the legal team acting for him in that case? Cherie Blair, wife of the previous PM.

Legal experts contend that the EU’s procrastination in utilising seized state funds as collateral for its financial support package is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, undemocratic power over democratic administrations may be obstructing the funds Ukraine desperately needs.

Misleading Claims and Growing Risks

Politicians promised that these scenarios could not occur. In 2014, a senior politician, championing the most significant and hazardous of all such treaties, stated: “The UK has signed trade agreement after trade deal and we have never seen a issue in the past.” An expert on this matter accused critics of “scaremongering … the fact is, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries should be concerned by ISDS claims. Predictions that “once firms begin to understand the influence they now possess, they will turn their attention from the weak nations to the strong ones” were met with scepticism.

That prediction is now a reality. Recently, oil and gas and resource corporations have initiated a record number of cases against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – state efforts to stop global warming. Corporations have to date won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP