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Can you perceive our political system works? Perhaps similar to this. The public votes for MPs. They legislate on bills. When a majority is secured, the bills become law. Legislation is upheld by the courts. That's it. Well, that used to be how it operated in the past. Not anymore.

The Advent of Offshore Tribunals

Today, international firms, and the oligarchs who own them, are able to litigate against nation states for the laws they pass, at private courts staffed by corporate lawyers. Such disputes are conducted behind closed doors. In contrast to domestic courts, these bodies allow no right of appeal or judicial review. You or I are unable to file a case to them, nor can our government, or even businesses based in this country. They are open only to entities based overseas.

Should an arbitration panel determines that a government measure might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

This compensation constitute not actual losses but compensation the panel members decide the company might otherwise have made. The administration may have to rescind the measure. It will be hesitant to introducing similar legislation along the same lines, for fear of incurring a lawsuit.

A Process Spiralling Out of Control

Record numbers of legal actions are being initiated, as firms observe each other, and private equity finance suits in return for a cut of the takings. The outcome? Democratic sovereignty and democracy are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede domestic law and the choices taken by parliaments is that this clause has been incorporated – without public consent, and often in conditions of total confidentiality – into bilateral investment treaties.

A Specific Case: The Whitehaven Coal Mine

Last year, environmental campaigners won a great victory at the high court. The judge found that plans to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had agreed to the extraordinary assertion that the mine would have no impact on national carbon targets. The incoming administration subsequently revoked the consent the previous administration had issued. Now, this legal outcome could be compromised by an secret arbitration panel accountable to exclusively the companies petitioning it.

Last August, a corporate entity whose final controllers are located in the offshore financial centre initiated proceedings versus the UK government. Recently a arbitration panel in the United States was convened to adjudicate on it.

This firm is litigating against the UK for the revenue it would have generated if the mine had been permitted to go ahead. Citizens have no clear indication how much this could amount to. What legal team is representing it challenging the UK administration? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot Sir Geoffrey Cox. The government enacts a policy, the domestic court supports it, then a overseas corporation disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

The Russian Case

Concurrently that the court on the mining lawsuit was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. We know scarce of the case so far, but it is highly possible that he will utilise the tribunal to challenge the sanctions the UK imposed on him after the war in Ukraine. He has previously initiated proceedings against another European state with similar intent, seeking a colossal sum: half that government’s annual revenue. Part of the lawyers acting for him in that case? Cherie Blair, married to the previous PM.

Trade specialists contend that the EU’s delay in leveraging immobilised state funds as guarantee for its financial support package is due to apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This remarkable, secretive influence over sovereign states could be blocking the funds Ukraine critically depends on.

False Assurances and Escalating Threats

We were assured that these events could not occur. Years ago, a senior politician, championing the most significant and hazardous of all these agreements, stated: “We’ve signed trade agreement after trade deal and there has not been a case in the past.” An adviser on this issue accused campaigners of “exaggeration … the truth is, ISDS barely touches the UK much”. The general impression seemed to be that only poorer nations needed to fear such legal actions. Warnings that “when companies grasp the authority they now possess, they will shift their focus from the vulnerable countries to the developed economies” were greeted by scepticism.

That prediction has now materialised. In the current period, energy and mining firms have initiated a record number of claims against nations rich and poor, challenging – similar to the UK mine – government attempts to prevent climate breakdown. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have obtained $84bn. That represents the combined GDP