A shadowy legal mechanism, embedded in international trade deals, is allowing foreign corporations and oligarchs to sue the United Kingdom for billions of pounds. These lawsuits challenge domestic laws and policies, from blocking a new coal mine to imposing sanctions, in secretive tribunals that operate outside the national legal system.
The Cumbrian Coal Mine: A Case Study in Sovereignty Undermined
The stark reality of this threat is crystallised in West Cumbria. In 2022, the High Court ruled that the government's approval for the UK's first deep coal mine in 30 years at Whitehaven was unlawful. The subsequent Labour government withdrew permission for the project. However, in August, a company ultimately owned in the Cayman Islands lodged a claim against the UK under an Investor-State Dispute Settlement (ISDS) clause.
A tribunal in Washington DC was appointed in November to hear the case. The company is suing for projected future profits lost because the mine was stopped. Representing the foreign company against the British government is Sir Geoffrey Cox KC, the Conservative MP for Torridge and West Devon and a former attorney general.
A Global Chilling Effect on Climate and Sanctions Policy
This is not an isolated incident. On the same day the coal mine tribunal was set up, it was revealed in a parliamentary answer that Russian oligarch Mikhail Fridman is also suing the UK via ISDS, likely challenging sanctions imposed after the invasion of Ukraine. He is separately demanding $16bn from Luxembourg. Legal experts suggest fear of such suits is delaying the EU's use of frozen Russian assets to aid Ukraine.
Fossil fuel and mining firms are now lodging a record number of suits globally. Corporations have so far won $114bn through ISDS, with fossil fuel companies securing $84bn of that total. The average payout is a staggering $1.2bn. This system creates a powerful chilling effect, with nations like France, Denmark, and New Zealand having reportedly curbed climate ambitions for fear of litigation.
Democracy For Sale in Secret Trade Deals
The ISDS process allows foreign corporations to sue governments in offshore tribunals composed of corporate lawyers. Cases are held in secret, with no right of appeal. The tribunals can award damages for potential lost profits, not just actual losses, forcing governments to abandon policies or pay crippling sums.
Despite a 2013 UK-commissioned report finding ISDS "highly unlikely to encourage investment" and offering "few or no benefits," the current government is reportedly pushing to include such mechanisms in new trade deals, like one with India, negotiated in total secrecy. This continues despite past assurances from figures like David Cameron that such lawsuits were not a concern for Britain.
The case of the Cumbrian coal mine proves that the threat has now fully materialised on UK soil, placing sovereignty, democratic decision-making, and urgent climate action in the hands of unaccountable offshore courts.
