Greetings, Foreign Oligarchs and Companies! Please Come and Sue the UK for Billions.

What is your perceive our political system operates? Maybe similar to this. Citizens choose MPs. They debate and pass bills. If a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. Simple as that. Well, that was how it used to work. Not anymore.

The Rise of Offshore Courts

In the modern era, foreign corporations, or the wealthy individuals who own them, are able to litigate against nation states for the policies they pass, at private courts staffed by commercial attorneys. Such disputes take place behind closed doors. Differing from national judiciaries, these bodies provide no right of appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, including companies headquartered in this country. The door is open solely for corporations based overseas.

When a secret court rules that a legislative action might diminish the corporation’s expected profits, it may order damages of vast sums, potentially billions.

These awards are based not on tangible damages but compensation the arbitrators decide the company would perhaps have made. The administration might be compelled to abandon its policy. It becomes deterred from passing future laws of a similar nature, worried about incurring a lawsuit.

A System Running Rampant

Unprecedented levels of cases are being filed, as corporations take cues from each other, and private equity bankroll lawsuits in exchange for a cut of the awards. The result? Democratic sovereignty and democratic governance are now unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the choices enacted by elected bodies is that this stipulation has been inserted – without public consent, and frequently under a climate of profound opacity – inside international trade agreements.

A Real-World Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners won a great victory at the senior court. The judge determined that proposals to open the first new deep coal mine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine would have had no consequence on climate commitments. The Labour government then withdrew the licence the previous administration had approved. Currently, this legal outcome is under threat by an offshore tribunal answering to exclusively the entities filing the suit.

During August, a company whose beneficial owners reside in the offshore financial centre initiated proceedings challenging the UK government. The previous week a tribunal in Washington DC was convened to hear it.

The company is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to commence operations. Citizens have no idea how much this could amount to. What legal team is acting on its behalf against the UK administration? A sitting MP, and former attorney-general in the previous government, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the domestic court supports it, then a foreign company challenges it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Case

On the same day that the tribunal on the coal mine dispute was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case at present, but it seems likely that he may employ the ISDS mechanism to contest the sanctions the UK enacted against him subsequent to the Russian aggression. He has already filed a claim against a small nation with similar intent, claiming a colossal sum: equivalent to half of government’s yearly budget. Part of the counsel representing him there? Cherie Blair, wife of the former British prime minister.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as guarantee for its financial support package stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations might be preventing the finance Ukraine critically depends on.

Empty Promises and Mounting Risks

Politicians promised that these events wouldn’t happen. Years ago, a government leader, championing the biggest and most dangerous of all these agreements, declared: “We’ve signed trade agreement after trade deal and there has never been a issue in the past.” An adviser on this matter described critics of “alarmism … in reality, ISDS does not affect the UK much”. The general impression seemed to be that only poorer nations had to worry about such legal actions. Cautionary notes that “once firms grasp the power they’ve been granted, they will shift their focus from the poorer states to the developed economies” were greeted by scepticism.

That warning has now materialised. Recently, fossil fuel and extraction companies have initiated a unprecedented number of claims against nations across the economic spectrum, challenging – as in the case of the Cumbrian coalmine – state efforts to stop climate breakdown. Corporations have to date won vast sums by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP