UK companies operating overseas are afforded far greater legal protections than the citizens of the countries they invest in, leading to corporations getting away with human rights and climate change abuses, a report has found.
The Transform Trade charity says the majority of UK bilateral investment treaties (BITs) contain no mention of climate change, the environment or human rights, meaning companies are not held accountable for violations.
By contrast, it found the UK is playing a key role in the rise of cases where corporations sue states, in private courts, for lost profits under controversial investor-state dispute settlement (ISDS) mechanisms specified in BITs.
ISDS cases have been used to challenged government responses to economic crises or taking climate policy actions, with awards running to billions of pounds.
Corporations based in the UK have brought 66 cases under ISDS mechanism in the past 10 years, the third highest of any country based on all known cases, and the number has increased in recent years, the report says.
Cases are said to have disproportionately targeted developing countries like Bolivia, Congo-Brazzaville, Tanzania and Colombia. The UK has no BITs with western European or north American countries, the report says.
Charlotte Timson, CEO of Transform Trade, said: “It can’t be right that British mining companies can sue developing countries for protecting their people and the environment. But that’s exactly what’s happening. If our new PM wants to live up to her claim that Britain is an advocate for human rights and climate action around the world, and wants to promote freedom and prosperity, then she must ensure that our trade deals don’t sabotage our existing commitments.”
The report says the threat of ISDS proceedings also imposes a “regulatory chill”, inhibiting governments from legislating to address human rights abuses and climate change for fear of being sued. It adds that only one of the UK’s 99 current BITs contains a provision that alludes to the environment and none contains provisions in relation to human rights.
“Many human rights abuses across the world can be linked back to corporations based in the UK, with UK laws inadequate in preventing and addressing these abuses,” the report says.
A separate report published by the Business and Human Rights Resource Centre last month found that 129 attacks on human rights defenders between 2015 and July 2022 were connected to UK business activities, one in five of which resulted in people being killed.
There has been no criminal prosecution of a UK corporation for human rights abuses overseas and just 17 human rights cases brought in the civil courts, with none yet having been successful at trial, although six have been settled and eight are ongoing, the Transform Trade report found.
It says the UK is also playing a significant role in the global increase of ISDS cases, as home to the highest number of investors acting as third-party funders of such claims in return for a share of any award granted.
The report concludes: “It is clear that UK law reform is needed in order to protect the climate, provide access to justice for victims, and enforce criminal penalties for British companies that violate human rights abroad.”
A Department for International Trade spokesperson said: “The government has made clear that we will not compromise on our environmental protections, including in free trade agreements.
“Bilateral investment treaties contribute towards a positive business environment for investors, and they do not eradicate governments’ right to regulate on environment and labour standards.”
