How do you reckon our system of government operates? Perhaps something like this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills are enacted as law. Legislation are enforced by the courts. Simple as that. However, that was how it operated in the past. No longer.
Today, international firms, along with the billionaires behind them, can sue governments for the regulations they pass, at offshore tribunals made up of business advocates. These proceedings are held in secret. Unlike our courts, these tribunals grant no opportunity to appeal or legal review. Ordinary citizens are unable to file a case to them, just as our government, including enterprises based in this country. The door is open solely for entities operating from foreign soil.
If a tribunal finds that a legislative action may compromise the corporation’s projected profits, it has the power to grant damages of hundreds of millions of pounds, potentially billions.
This compensation represent not tangible damages but money the tribunal officials determine the company could potentially have made. The government may have to rescind the measure. It becomes deterred from introducing similar legislation of a similar nature, due to the risk of being sued.
Unprecedented levels of legal actions are being filed, as firms learn from each other, and private equity bankroll lawsuits in exchange for a portion of the awards. The outcome? National sovereignty and democracy are turning into too costly.
The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the choices made by elected bodies is that this provision has been inserted – absent public approval, and often in a climate of profound opacity – into trade treaties.
Twelve months ago, a conservation group won a great victory at the senior court. The judge ruled that plans to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no impact on climate commitments. The new government subsequently revoked the consent the former government had issued. Today, this victory could be compromised by an offshore tribunal reporting to only the entities bringing the case.
Last August, a corporate entity whose ultimate owners are based in the tax haven filed a lawsuit against the UK government. Last week a dispute settlement body in the US capital was convened to consider the case.
The company is seeking compensation from the UK for the money it would have generated if the mine had been permitted to go ahead. We have no clear indication how much this might be. What legal team is serving as its counsel against the UK administration? An elected representative, and ex-law officer in the previous government, the noted patriot Geoffrey Cox. The government passes a law, the domestic court supports it, then a foreign company challenges it through an unaccountable offshore tribunal, and a elected official works for its behalf.
Simultaneously that the court on the coal mine dispute was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it is highly possible that he’ll use the arbitration process to challenge the penalties the UK levied against him after the Russian aggression. He has initiated proceedings against another European state with similar intent, claiming sixteen billion dollars: half that government’s yearly income. Part of the lawyers acting for him in that case? the wife of a former prime minister, married to the former British prime minister.
Legal experts contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its financial support package stems from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, secretive influence over elected governments could be blocking the money Ukraine desperately needs.
The public was told that these scenarios could not occur. Previously, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, told us: “The UK has signed trade deal after trade deal and there has never been a problem in the past.” An adviser on this topic labelled activists of “exaggeration … the truth is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that only poorer nations needed to fear such legal actions. Warnings that “once firms grasp the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were met with general mockery.
That prediction is now a reality. In the current period, fossil fuel and extraction companies have initiated a historic level of claims against nations both wealthy and developing, challenging – like the example of the UK mine – official measures to halt climate breakdown. Corporations have thus far won vast sums through ISDS, of which energy giants have secured eighty-four billion dollars. That equates to the combined GDP
Elara Vance is a seasoned betting analyst with over a decade of experience in sports journalism and statistical modeling for UK markets.