How do you reckon our political system functions? Maybe along the lines of this. We elect MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Statutes is upheld by the courts. That's it. Yet, that’s how it operated in the past. Those days are over.
In the modern era, overseas companies, along with the billionaires who own them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals composed of business advocates. The cases are held behind closed doors. Differing from national judiciaries, these bodies grant no opportunity to appeal or legal review. The general public are barred from bringing a case to them, and neither can our government, or even businesses headquartered in this country. The door is open exclusively to corporations based overseas.
When a secret court determines that a law or policy might diminish the corporation’s anticipated profits, it can award compensation of vast sums, running into billions.
These awards constitute not actual losses but compensation the tribunal officials determine the company might otherwise have made. The state could be forced to drop the legislation. It is discouraged from enacting future policies of a similar nature, worried about facing litigation.
Record numbers of legal actions are being brought, as corporations learn from each other, and hedge funds bankroll lawsuits for a share of a share of the takings. The outcome? Sovereignty and democracy are now unaffordable.
The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump national legislation and the decisions made by elected bodies is that this stipulation has been written – without democratic mandate, and often in a climate of total confidentiality – within bilateral investment treaties.
Twelve months ago, environmental campaigners won a great victory at the high court. The justice found that plans to open the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine would have no impact on our carbon budgets. The incoming administration then withdrew the permission the previous administration had issued. Today, this legal outcome is under threat by an secret arbitration panel answering to only the companies petitioning it.
During August, a firm whose beneficial owners are located in the Cayman Islands filed a lawsuit versus the UK government. The previous week a arbitration panel in the United States was established to consider the case.
This firm is seeking compensation from the UK for the profits it could have earned if the mine had received permission to go ahead. The public has little idea how much this sum represents. What legal team is acting on its behalf against the UK administration? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot the MP. The administration passes a law, the domestic court upholds it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a elected official represents its behalf.
On the same day that the panel on the coalmine case was established, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are nothing of the case at present, but it appears probable that he’ll use the tribunal to challenge the restrictions the UK enacted against him following the Russian aggression. He has previously started suing another European state with similar intent, demanding sixteen billion dollars: equivalent to half of state's yearly income. Part of the counsel acting for him in that case? Cherie Blair, spouse of the previous PM.
International law scholars contend that the EU’s procrastination in utilising seized Russian assets as guarantee for its financial support package stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This unprecedented, unaccountable authority over democratic administrations could be blocking the funds Ukraine urgently requires.
Politicians promised that these events wouldn’t happen. Years ago, a government leader, championing the most significant and hazardous of all investment pacts, told us: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” An expert on this matter accused campaigners of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression appeared to be that only poorer nations had to worry about ISDS claims. Warnings that “when companies begin to understand the power they now possess, they will shift their focus from the vulnerable countries to the strong ones” were met with general mockery.
That warning has come to pass. Recently, fossil fuel and mining firms have filed a unprecedented number of suits against nations rich and poor, contesting – like the example of the UK mine – official measures to halt climate breakdown. Firms have to date won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained $84bn. That represents the combined GDP
A software engineer and tech writer passionate about open-source projects and AI advancements.
