Greetings, Foreign Tycoons and Firms! Kindly Come and Sue the UK for Billions of Pounds.

What is your perceive our system of government functions? It could be something like this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Legislation are enforced by the courts. End of story. Well, that used to be how it once functioned. Those days are over.

The Rise of Secret Courts

In the modern era, foreign corporations, and the billionaires behind them, are able to litigate against nation states for the laws they pass, at private courts made up of business advocates. The cases take place away from public scrutiny. In contrast to domestic courts, these bodies allow no avenue for appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even companies operating from this country. The door is open only to businesses registered abroad.

When a secret court rules that a law or policy may compromise the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, running into billions.

These awards constitute not actual losses but compensation the panel members determine the company could potentially have made. The government could be forced to drop the legislation. It will be hesitant to enacting future policies along the same lines, worried about incurring a lawsuit.

A Mechanism Spiralling Out of Control

Record numbers of legal actions are being brought, as companies take cues from each other, and private equity bankroll lawsuits in exchange for a cut of the awards. The consequence? Democratic sovereignty and democracy are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the rulings made by legislatures is that this stipulation has been incorporated – absent public approval, and often in an atmosphere of total confidentiality – inside international trade agreements.

A Concrete Example: The Cumbrian Coal Mine

Twelve months ago, activists won a great victory at the High Court. The justice ruled that plans to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration subsequently revoked the consent the former government had granted. Now, this success could be compromised by an secret arbitration panel answering to no one but the entities bringing the case.

In August, a corporate entity whose ultimate owners are based in the offshore financial centre lodged a claim against the UK government. Last week a tribunal in Washington DC was convened to hear it.

The company is suing the UK for the revenue it might have made if the mine had been permitted to commence operations. The public has no clear indication how much this might be. What legal team is acting on its behalf against the British government? A sitting MP, and ex-law officer in the previous government, the noted patriot Geoffrey Cox. The government enacts a policy, the national judiciary supports it, then a international entity disputes it through an unaccountable offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Challenge

On the same day that the panel on the mining lawsuit was established, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case so far, but it appears probable that he will utilise the tribunal to contest the sanctions the UK levied against him following the war in Ukraine. He has already started suing Luxembourg on these grounds, seeking a colossal sum: an amount representing half nation's yearly budget. Among the counsel representing him there? Cherie Blair, married to the previous PM.

International law scholars believe that the EU’s hesitation in using frozen Russian assets as collateral for its financial support package is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over democratic administrations could be blocking the funds Ukraine urgently requires.

Misleading Claims and Escalating Risks

We were assured that such things could not occur. Years ago, a senior politician, promoting the largest and riskiest of all such treaties, stated: “The UK has signed trade deal after trade deal and there has not been a issue in the past.” An expert on this matter described critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries should be concerned by these lawsuits. Predictions that “as corporations begin to understand the influence they now possess, they will shift their focus from the weak nations to the developed economies” were met with general mockery.

That warning has come to pass. This year, energy and mining firms have filed a record number of claims against nations both wealthy and developing, opposing – like the example of the UK mine – government attempts to stop climate breakdown. Corporations have to date won vast sums by using ISDS, of which oil majors have secured the majority. That represents the combined GDP