🔗 Share this article

What is your perceive our system of government operates? Maybe something like this. The public votes for MPs. They vote on bills. Should a majority is achieved, the bills are enacted as law. The law are enforced by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Rise of Secret Arbitration Panels

Today, foreign corporations, or the oligarchs behind them, can sue governments for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases take place in secret. Differing from national judiciaries, these bodies allow no avenue for appeal or judicial review. The general public are barred from bringing a case to them, nor can our government, or even businesses headquartered in this country. Access is granted exclusively to businesses based overseas.

If a tribunal finds that a government measure could harm the corporation’s projected profits, it may order damages of hundreds of millions of pounds, running into billions.

These awards are based not on real financial harm but compensation the tribunal officials decide the company could potentially have made. The administration may have to rescind the measure. It becomes deterred from passing future laws of a similar nature, worried about facing litigation.

A System Growing Exponentially

Historically high figures of cases are being initiated, as firms learn from each other, and investment funds bankroll lawsuits in exchange for a portion of the settlements. The consequence? Democratic sovereignty and popular rule are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede a country's own laws and the choices taken by elected bodies is that this stipulation has been inserted – absent public approval, and often in conditions of total confidentiality – into international trade agreements.

A Concrete Example: The UK Coal Mine

A year ago, a conservation group secured a significant win at the high court. The justice determined that proposals to dig the first deep coalmine in the UK for a generation, in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine would have zero effect on national carbon targets. The new government then withdrew the consent the Tories had issued. Now, this victory could be compromised by an foreign court reporting to no one but the companies petitioning it.

During August, a firm whose ultimate owners reside in the tax haven lodged a claim against the UK government. Last week a arbitration panel in the United States was set up to hear it.

The claimant is seeking compensation from the UK for the profits it might have made if the mine had received permission to proceed. We have little idea how much this sum represents. What legal team is serving as its counsel challenging the state? An elected representative, and ex-law officer in the previous government, the self-proclaimed patriot the MP. The state enacts a policy, the national judiciary supports it, then a international entity disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coalmine case was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are scarce of the case so far, but it seems likely that he will utilise the ISDS mechanism to contest the penalties the UK enacted against him subsequent to the Russian aggression. He has initiated proceedings against another European state on these grounds, seeking a colossal sum: half that state's yearly income. Part of the lawyers representing him there? Cherie Blair, married to the former British prime minister.

Trade specialists believe that the EU’s delay in utilising seized oligarchs' funds as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over elected governments could be blocking the money Ukraine urgently requires.

Misleading Claims and Growing Threats

The public was told that these events could not occur. Years ago, a former prime minister, championing the most significant and hazardous of all these agreements, stated: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” An adviser on this matter accused critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that only poorer nations should be concerned by ISDS claims. Warnings that “when companies start to realise the authority they now possess, they will redirect their efforts from the vulnerable countries to the strong ones” were greeted by general mockery.

That prediction is now a reality. In the current period, oil and gas and resource corporations have lodged a unprecedented number of cases against nations across the economic spectrum, challenging – as in the case of the UK mine – state efforts to prevent environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP