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What is your understand our political system functions? Maybe something like this. We elect MPs. They vote on bills. Should a majority is obtained, the bills pass into law. Legislation is upheld by the courts. End of story. Well, that used to be how it used to work. No longer.

The Emergence of Secret Tribunals

In the modern era, international firms, and the billionaires who own them, can sue governments for the regulations they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes take place away from public scrutiny. Unlike our courts, these panels provide no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, nor can our government, including companies headquartered in this country. The door is open exclusively to businesses based overseas.

When a secret court determines that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, potentially billions.

These awards represent not actual losses but funds the tribunal officials decide the company might otherwise have made. The state may have to rescind the measure. It becomes discouraged from enacting future policies in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being filed, as companies learn from each other, and hedge funds fund legal actions for a share of a cut of the takings. The result? Democratic sovereignty and popular rule are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it can trump a country's own laws and the choices taken by parliaments is that this stipulation has been inserted – absent public approval, and frequently under conditions of total confidentiality – inside bilateral investment treaties.

A Specific Case: The Whitehaven Coalmine

A year ago, activists secured a significant win at the High Court. The presiding officer ruled that proposals to dig the first new deep coal mine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine could have zero effect on climate commitments. The Labour government subsequently revoked the permission the former government had issued. Now, this success could be compromised by an offshore tribunal reporting to no one but the entities petitioning it.

In August, a company whose beneficial owners reside in the tax haven initiated proceedings against the UK government. The previous week a tribunal in Washington DC was convened to consider the case.

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to commence operations. Citizens have no clear indication how much this sum represents. Which individual is serving as its counsel against the state? A sitting MP, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the domestic court upholds it, then a international entity contests it through an unaccountable arbitration panel, and a elected official acts on its behalf.

The Russian Case

Simultaneously that the panel on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know scarce of the case at present, but it seems likely that he may employ the ISDS mechanism to contest the sanctions the UK enacted against him subsequent to the invasion of Ukraine. He has already started suing another European state for this reason, claiming sixteen billion dollars: equivalent to half of state's yearly budget. Included in the lawyers representing him there? the wife of a former prime minister, wife of the previous PM.

Trade specialists argue that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine stems from concerns within Belgium that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This remarkable, secretive influence over elected governments could be blocking the money Ukraine urgently requires.

Empty Promises and Escalating Threats

Politicians promised that these events could not occur. Previously, a former prime minister, promoting the most significant and hazardous of all these agreements, told us: “Britain has agreed to trade agreement upon trade deal and there has never been a problem in the past.” An expert on this topic accused critics of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries needed to fear ISDS claims. Warnings that “once firms begin to understand the authority they now possess, they will turn their attention from the vulnerable countries to the strong ones” were met with general mockery.

That warning has now materialised. This year, energy and resource corporations have initiated a record number of claims against nations across the economic spectrum, contesting – as in the case of the UK mine – government attempts to prevent environmental catastrophe. Firms have to date won vast sums through ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP