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What is your perceive our system of government works? Perhaps along the lines of this. We elect MPs. They debate and pass bills. If a majority is achieved, the bills pass into law. Statutes are enforced by the courts. That's it. Yet, that was how it once functioned. Those days are over.

The Advent of Secret Tribunals

In the modern era, international firms, or the billionaires who own them, have the power to sue elected administrations for the regulations they pass, at offshore tribunals composed of corporate lawyers. The cases take place in secret. Unlike our courts, these tribunals allow no opportunity to appeal or oversight by judges. Ordinary citizens cannot take a case to them, and neither can our government, or even enterprises operating from this country. They are open only to businesses operating from foreign soil.

When a secret court rules that a government measure could harm the corporation’s projected profits, it can award compensation of hundreds of millions, potentially billions.

These awards represent not actual losses but money the arbitrators determine the company would perhaps have made. The administration could be forced to abandon its policy. It is deterred from passing future laws of a similar nature, worried about being sued.

A System Running Rampant

Historically high figures of cases are being brought, as companies learn from each other, and hedge funds fund legal actions for a share of a cut of the settlements. The outcome? Democratic sovereignty and democracy are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the decisions enacted by parliaments is that this provision has been incorporated – without democratic mandate, and typically amid conditions of total confidentiality – into trade treaties.

A Concrete Example: The Cumbrian Coal Mine

A year ago, activists secured a significant win at the senior court. The justice determined that plans to dig the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine could have zero effect on national carbon targets. The incoming administration later cancelled the permission the previous administration had issued. Today, this victory is under threat by an offshore tribunal reporting to only the corporations filing the suit.

In August, a company whose beneficial owners reside in the tax haven filed a lawsuit versus the UK government. Recently a arbitration panel in the United States was set up to consider the case.

The company is suing the UK for the profits it could have earned if the mine had received permission to commence operations. We have no idea how much this could amount to. Who is acting on its behalf against the UK administration? A member of parliament, and former attorney-general in the previous government, the noted patriot Sir Geoffrey Cox. The administration makes a decision, the domestic court supports it, then a international entity disputes it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

The Russian Case

Concurrently that the panel on the coalmine case was established, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know nothing of the case to date, but it is highly possible that he may employ the tribunal to fight the restrictions the UK levied against him after the invasion of Ukraine. He has previously initiated proceedings against a small nation with similar intent, seeking a colossal sum: an amount representing half government’s yearly budget. Among the legal team representing him there? Cherie Blair, married to the ex-UK leader.

Trade specialists contend that the EU’s procrastination in utilising seized oligarchs' funds as security for its loan to Ukraine arises from concerns within Belgium that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, secretive influence over democratic administrations could be blocking the finance Ukraine critically depends on.

Empty Promises and Growing Costs

We were assured that these events wouldn’t happen. Years ago, a government leader, championing the largest and riskiest of all such treaties, declared: “Britain has agreed to investment treaty upon trade deal and there has never been a issue in the past.” A consultant on this topic accused critics of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that only poorer nations had to worry about these lawsuits. Predictions that “when companies start to realise the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were dismissed with scepticism.

That threat is now a reality. In the current period, fossil fuel and mining firms have filed a historic level of cases against nations rich and poor, challenging – like the example of the UK mine – official measures to halt environmental catastrophe. Companies have so far won $114bn through ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP