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How do you reckon our system of government operates? Perhaps along the lines of this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills pass into law. Statutes is upheld by the courts. That's it. However, that used to be how it operated in the past. Those days are over.

The Rise of Secret Tribunals

In the modern era, foreign corporations, along with the billionaires that control them, are able to litigate against nation states for the laws they pass, at private courts composed of business advocates. Such disputes are held away from public scrutiny. In contrast to domestic courts, these panels provide no avenue for appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, including businesses based in this country. Access is granted only to corporations based overseas.

Should an arbitration panel determines that a government measure may compromise the corporation’s expected profits, it can award financial penalties of hundreds of millions of pounds, potentially billions.

This compensation are based not on real financial harm but funds the arbitrators conclude the company might otherwise have made. The administration could be forced to abandon its policy. It will be deterred from passing future laws in that area, for fear of incurring a lawsuit.

A Process Running Rampant

Unprecedented levels of cases are being initiated, as firms learn from each other, and investment funds finance suits in return for a cut of the awards. The result? National sovereignty and democracy are turning into too costly.

The process is called “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the choices made by parliaments is that this provision has been written – absent public approval, and frequently under a climate of extreme secrecy – into bilateral investment treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The judge determined that proposals to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had agreed to the extraordinary assertion that the mine could have zero effect on national carbon targets. The Labour government then withdrew the licence the Tories had issued. Currently, this success could be compromised by an offshore tribunal answering to no one but the entities petitioning it.

During August, a company whose beneficial owners are based in the tax haven filed a lawsuit challenging the UK government. Recently a tribunal in the United States was set up to hear it.

The company is seeking compensation from the UK for the money it might have made if the mine had been permitted to proceed. The public has little idea how much this could amount to. What legal team is representing it against the British government? A sitting MP, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the high court validates it, then a foreign company challenges it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

The Russian Challenge

Simultaneously that the court on the coalmine case was convened, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it appears probable that he’ll use the ISDS mechanism to contest the penalties the UK enacted against him following the invasion of Ukraine. He has started suing a small nation on these grounds, demanding $16bn: equivalent to half of state's yearly budget. Included in the counsel on his side? Cherie Blair, wife of the previous PM.

Legal experts contend that the EU’s delay in using frozen oligarchs' funds as collateral for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, unaccountable authority over elected governments may be obstructing the money Ukraine desperately needs.

Empty Promises and Mounting Costs

We were assured that such things could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all such treaties, declared: “Britain has agreed to investment treaty after trade deal and there has not been a issue in the past.” A consultant on this topic labelled critics of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear these lawsuits. Predictions that “as corporations grasp the influence they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were met with widespread derision.

That threat has come to pass. Recently, oil and gas and resource corporations have lodged a record number of claims against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which oil majors have secured the majority. That equates to the combined GDP