Hello, foreign oligarchs and corporations! Please come and sue the UK for billions | George Monbiot

HHow do you think our political system works? Maybe something like this. We elect deputies. They vote on bills. If a majority is reached, the bill becomes law. The law is respected by the courts. End of story. Well, that’s how it worked. Not anymore.

Today, foreign corporations, or the oligarchs who own them, can sue governments for the laws they pass, in offshore courts staffed by corporate lawyers. The affairs are kept secret. Unlike our courts, these courts do not grant any right of appeal or judicial review. You or I cannot complain to them, nor our government, nor even the companies based in this country. They are only open to companies based abroad.

If a court determines that a law or policy may jeopardize the company’s projected profits, it can award damages amounting to hundreds of millions or even billions. These sums do not represent actual losses, but money that the arbitrators decide on the company. could otherwise did. The government may have to abandon its policy. He will be discouraged from passing laws in the same direction in the future, for fear of being sued.

A record number of lawsuits are being filed, as companies learn from each other and hedge funds finance lawsuits in exchange for a share of the proceeds. The result? Sovereignty and democracy are becoming unaffordable.

This process is known as investor-state dispute settlement (ISDS). The reason it is allowed to override national law and decisions taken by parliaments is that this provision has been written – without public consent, and often under conditions of extreme secrecy – into commercial treaties.

A year ago, Friends of the Earth won a major victory in the High Court. The judge ruled that plans to dig the UK’s first deep coal mine for 30 years, at Whitehaven, Cumbria, had been illegally approved by the Conservative government, which accepted the bizarre claim that the mine would have no impact on our carbon budgets. The Labor government then withdrew the permission granted by the Conservatives. However, this victory could be compromised by an offshore court responding only to companies’ requests.

In August, a company whose ultimate owners are based in the Cayman Islands filed a lawsuit against the British government. Last week, a court in Washington DC was established to hear the case.

The company is suing the UK for money it could have made if the mine had been allowed to develop. We have no idea how much that might be. Who represents him against the British government? The MP for Torridge and Tavistock and former Attorney General in the Conservative government, that great patriot Geoffrey Cox. The government makes a decision, the High Court upholds it, then a foreign company challenges it in an undemocratic offshore court, and a member of our Parliament acts on its behalf.

On the same day (18 November) that the coal mining tribunal was appointed, we learned through a parliamentary response that the UK was also being sued under ISDS by a Russian oligarch, Mikhail Fridman. We don’t know anything about this case so far, but it seems likely that he will use the court to challenge sanctions imposed by the UK against him after the invasion of Ukraine. It is for this reason that he has already started taking Luxembourg to court, demanding $16 billion (£12.1 billion), or half of that government’s annual revenue. Among the lawyers representing him there? Cherie Blair, wife of the former British Prime Minister.

Legal experts say the EU’s delay in using frozen Russian assets as collateral for its loan to Ukraine stems from Belgium’s fear of being sued in offshore company courts under Belgian law./Luxembourg-Russia bilateral investment treaty. This extraordinary, undemocratic power over elected governments could block the money Ukraine desperately needs.

We were assured that such things would not happen. In 2014, David Cameron, promoter of the largest and most dangerous of all such treaties, told us: “We have signed one trade deal after another and there has never been a problem in the past. The House of Lords adviser on the issue, Professor Dennis Novy, accused campaigners of “alarmism… in reality ISDS doesn’t affect the UK much”. The general message seemed to be that only poorer nations should fear these prosecutions. I warned, to widespread mockery, that “as corporations begin to understand the power they have been given, they will shift their attention from weak nations to strong nations.”

This threat has now materialized. This year, oil and mining companies have brought a record number of lawsuits against rich and poor countries, challenging – as in the case of the Cumbria coal mine – the government’s attempts to stop climate change. Businesses have so far gained $114bn (£86bn) from ISDS, of which $84bn (£64bn) has been secured by fossil fuel companies. This is equivalent to the combined GDP of the world’s 45 smallest economies. The average payment these companies received is $1.2 billion (£910 million). In some cases, they threaten to wipe out poorer nations. This is climate finance in reverse: huge payouts to fossil fuel companies from governments with the temerity to try to end an existential crisis.

These prosecutions also have a major deterrent effect on governments that would like to go further. France, Denmark and New Zealand have all scaled back their climate ambitions for fear of legal action, and there are likely many more.

We gain nothing from these treaty provisions. A 2020 meta-study found that when it comes to encouraging foreign investment, “the effect of international investment agreements is so small that it can be considered zero.” A report commissioned by the UK government in 2013 found that ISDS was “highly unlikely to encourage investment” and was “likely to bring little or no benefit to the UK”.

However, Keir Starmer’s government is covering its ears. The country has reportedly attempted to introduce an ISDS mechanism into the investment treaty it is negotiating with India, as well as other trade treaties it is working on. We cannot know for sure, as they are negotiated in complete secrecy. You could almost believe that there were things the government didn’t want us to see. He refuses to speak to the activists or offer them more information.

We have twice thwarted attempts to expand ISDS, thanks to broad grassroots movements against the Multilateral Agreement on Investment and the Transatlantic Trade and Investment Partnership. Now we will have to mobilize again: this time against our own government, which seems to care more about foreign companies than us.