Analysis Reveals $92bn in Public Money Awarded to Fossil Fuel and Mining Firms, With Speculators Cashing In

A growing number of financial speculators are funding lawsuits against governments over environmental regulations, turning legal claims into a highly lucrative business.

Traditionally, litigation finance was associated with personal injury and employment disputes. However, investors have shifted their focus to large-scale arbitration cases, where corporations sue states for regulatory measures that affect their profits. This practice operates under investor-state dispute settlement (ISDS) mechanisms, which allow businesses to claim damages from governments for policy decisions that impact their earnings.

With legal awards averaging over $200m (£160m), experts warn that ISDS has become a financial windfall for hedge funds and specialist financiers. Legal analysis by The Guardian shows that more than $120bn has been awarded to corporations through ISDS tribunals, including $84bn to fossil fuel companies and $7.8bn to mining firms. However, the real figures are likely much higher, as many payouts remain undisclosed.

At least 75 ISDS cases have been backed by third-party funders, with a significant portion involving fossil fuel or mining disputes. More than half of these claims originate from investors in the US, UK, or Canada, and most target developing nations. Legal scholars and arbitrators are raising concerns over the expansion of third-party funding, warning that it incentivises speculative claims, forcing governments to bear the costs of defending cases that may lack merit.

Notable cases include a Bolivian mining dispute where the government was compelled to pay $18.7m to a company accused of environmental damage and intimidation. Another involves a Canadian firm suing Mexico for $408m over a mining blockade. Additionally, Greenland faces a high-profile claim that could force it to lift a uranium mining ban or pay up to $11.5bn in compensation.

Industry leaders defend third-party litigation funding as a tool to improve access to justice. Christopher Bogart, CEO of Burford Capital—the world’s largest litigation-finance firm—insists that such investments weed out weak cases, as funders only profit when their clients win. However, critics argue that the system prioritises financial returns over legitimate legal grievances, escalating costs and burdening taxpayers.

Arbitrators have begun questioning the role of third-party financiers in ISDS cases, suggesting they should be held accountable for legal costs incurred by governments. Some experts believe that allowing financiers to fund these lawsuits without risk has transformed ISDS into a “gambler’s paradise,” where the potential for massive financial gains fuels a growing industry of speculative litigation.