How do you perceive our system of government functions? Perhaps something like this. Citizens choose MPs. They legislate on bills. Should a majority is obtained, the bills become law. Statutes is upheld by the courts. Simple as that. However, that used to be how it operated in the past. Not anymore.
In the modern era, overseas companies, along with the oligarchs who own them, can sue governments for the laws they pass, at offshore tribunals made up of business advocates. Such disputes are held away from public scrutiny. Differing from national judiciaries, these tribunals grant no opportunity to appeal or legal review. Ordinary citizens are barred from bringing a case to them, nor can our government, including enterprises headquartered in this country. Access is granted only to businesses registered abroad.
When a secret court finds that a government measure could harm the corporation’s expected profits, it has the power to grant compensation of vast sums, running into billions.
These sums are based not on actual losses but compensation the tribunal officials decide the company would perhaps have made. The administration may have to rescind the measure. It becomes discouraged from introducing similar legislation of a similar nature, worried about being sued.
Record numbers of legal actions are being initiated, as firms take cues from each other, and private equity fund legal actions in return for a share of the settlements. The outcome? National sovereignty and democratic governance are turning into too costly.
This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the rulings made by legislatures is that this stipulation has been written – without public consent, and frequently under conditions of extreme secrecy – within bilateral investment treaties.
Twelve months ago, a conservation group won a great victory at the high court. The presiding officer found that plans to open the first deep coalmine in the UK for three decades, in northwest England, had been wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have no consequence on our carbon budgets. The Labour government later cancelled the permission the Tories had approved. Now, this victory could be compromised by an offshore tribunal reporting to exclusively the corporations filing the suit.
In August, a corporate entity whose ultimate owners are located in the offshore financial centre filed a lawsuit against the UK government. The previous week a arbitration panel in the United States was set up to consider the case.
The claimant is litigating against the UK for the revenue it could have earned if the mine had received permission to proceed. We have little idea how much this could amount to. What legal team is representing it challenging the UK administration? A sitting MP, and former attorney-general in the previous government, the self-proclaimed patriot the MP. The government passes a law, the national judiciary upholds it, then a international entity contests it through an unaccountable arbitration panel, and a sitting MP represents its behalf.
On the same day that the tribunal on the mining lawsuit was convened, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case at present, but it appears probable that he’ll use the arbitration process to challenge the restrictions the UK levied against him following the Russian aggression. He has initiated proceedings against another European state with similar intent, claiming sixteen billion dollars: half that nation's yearly income. Among the legal team acting for him in that case? a prominent lawyer, wife of the former British prime minister.
Trade specialists contend that the EU’s hesitation in using frozen Russian assets as security for its loan to Ukraine is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This remarkable, unaccountable authority over elected governments could be blocking the finance Ukraine critically depends on.
The public was told that these scenarios could not occur. Previously, a senior politician, advocating for the largest and riskiest of all these agreements, declared: “The UK has signed trade deal after trade deal and we have never seen a problem in the past.” An adviser on this matter labelled campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries should be concerned by ISDS claims. Predictions that “once firms start to realise the influence bestowed upon them, they will redirect their efforts from the weak nations to the developed economies” were greeted by widespread derision.
That threat has come to pass. This year, fossil fuel and resource corporations have filed a unprecedented number of cases against nations across the economic spectrum, opposing – like the example of the UK mine – state efforts to stop climate breakdown. Corporations have thus far won vast sums through ISDS, of which oil majors have secured eighty-four billion dollars. That equates to the combined GDP
Marlon Vance is a seasoned sports analyst with over a decade of experience in betting markets, specializing in data-driven predictions and strategy development.
