An Investor-State Dispute Settlement process has started following High Court ruling that a proposed mining project would threaten emissions targets, with the UK’s former Attorney General acting on behalf of claimants.
Struck down by a British court last September, plans for a new coal mine at Whitehaven, Cumbria, were considered a huge climate misstep by campaigners. In agreement, the presiding judge blocked a planning application by West Cumbria Mining, largely due to the fact the project would have a hugely detrimental impact on internationally agreed environmental and emissions targets — adding roughly the same carbon contribution as is produced by Spain annually.
On Friday 8th August, investors in the mine based in Singapore and the UK began proceedings agains the UK government, citing a 1975 treaty between the two states which supposedly allows foreign companies to bypass national courts and challenge national policies via an arbitration panel. Former Attorney General and Conservative MP Geoffrey Cox is acting on behalf of the claimants.
This relies on a system known as investor-state dispute settlements [ISDS], which have long been considered a potential issue and, in recent years, are increasingly being used by companies with vested interests in projects which could be considered damaging to the climate and environment. Meanwhile, others have warned the entire process represents and infringement on the sovereignty of countries, with the United Nations describing the process as ‘unjust, undemocratic and dysfunctional’, recommending countries withdraw from any and all treaties that facilitate this action.
In March, the law firm Pinsent Masons published a report on how ‘UK arbitration developments continue to enhance position as key dispute resolution jurisdiction’. This includes the Court of Appeal of England and Wales ruling that states cannot rely on sovereign immunity to oppose the registration of International Centre for Settlement of Investment Disputes awards against them.
‘In addition, 2024 saw numerous applications in the English courts for anti-suit and anti-enforcement injunctions, largely relating to proceedings commenced in the Russian courts under article 248 of the Russian Arbitration Procedural Code in breach of arbitration agreements or exclusive jurisdiction clauses,’ the report continues. ‘These cases illustrate the various tools that the English courts are willing to deploy to protect arbitration agreements and highlight the circumstances in which is it appropriate to grant relief and the procedural hurdles and issues that may arise.’
While not all cases reflected the tension between major infrastructure projects and the environment, this does show that London in particular is considered one of the most favourable legal landscapes in which to undertake ISDS proceedings in any relevant case. This is reflected in analysis of frequency, with a London Court of International Arbitration assessment of cases between 1st January 2017 and 12th May 2024 showing a steady increase in referrals bar a short downward correction due to the Covid-19 pandemic. 96% of these are ‘international in nature’, with 79% not involving any UK party and just 4% featuring only-organisations based in the UK.
‘[We are] very disappointed to see this attempt to sue the UK taxpayer after their proposed coal mine was refused an extraction licence and its planning application was quashed by the UK High Court,’ said Chris Rowley of South Lakes Action on Climate Change. ‘It’s very hard to see what valid grounds West Cumbria Mining might have, and worrying that this might all take place behind closed doors. We hope that the UK Government will oppose this claim as strongly as they can.’
‘These corporate courts mean that when governments or courts make the right decision, like halting the Cumbria coal mine, foreign corporations have the power to threaten the government in highly secretive processes. If they win, they get to pass their losses from obsolete projects onto the taxpayer,’ added Cleodie Rickard, Trade Campaign Manager at Global Justice Now. ‘This has to be a wake up call. The UK must finally remove this deeply undemocratic system from all its trade and investment deals and untie this straitjacket on our climate action.’
Image: Saúl Bucio / Unsplash
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