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What is your understand our system of government works? Maybe something like this. The public votes for MPs. They vote on bills. If a majority is achieved, the bills pass into law. Legislation are enforced by the courts. Simple as that. Well, that was how it operated in the past. No longer.

The Advent of Secret Courts

Nowadays, foreign corporations, and the wealthy individuals behind them, are able to litigate against nation states for the regulations they pass, at offshore tribunals made up of corporate lawyers. Such disputes take place in secret. Differing from national judiciaries, these tribunals provide no opportunity to appeal or judicial review. The general public cannot take a case to them, and neither can our government, or even enterprises headquartered in this country. Access is granted exclusively to entities operating from foreign soil.

Should an arbitration panel determines that a law or policy may compromise the corporation’s anticipated profits, it may order financial penalties of hundreds of millions, potentially billions.

These sums represent not tangible damages but compensation the arbitrators determine the company might otherwise have made. The state might be compelled to abandon its policy. It becomes deterred from enacting future policies in that area, worried about being sued.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being filed, as companies take cues from each other, and investment funds bankroll lawsuits in return for a portion of the awards. The outcome? Democratic sovereignty and popular rule are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the decisions taken by elected bodies is that this clause has been written – without public consent, and frequently under a climate of profound opacity – inside trade treaties.

A Specific Instance: The Whitehaven Coalmine

Last year, activists secured a significant win at the senior court. The justice found that plans to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had accepted the extraordinary assertion that the mine would have had no consequence on national carbon targets. The new government later cancelled the consent the previous administration had approved. Today, this success is under threat by an offshore tribunal reporting to exclusively the entities filing the suit.

During August, a corporate entity whose ultimate owners are located in the offshore financial centre filed a lawsuit versus the UK government. The previous week a tribunal in the US capital was set up to adjudicate on it.

The company is litigating against the UK for the money it might have made if the mine had been allowed to proceed. The public has no idea how much this could amount to. Which individual is acting on its behalf in opposition to the UK administration? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation challenges it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the mining lawsuit was established, information emerged from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case at present, but it appears probable that he will utilise the tribunal to challenge the penalties the UK enacted against him after the war in Ukraine. He has filed a claim against a small nation with similar intent, claiming sixteen billion dollars: half that government’s yearly income. Included in the lawyers representing him there? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s procrastination in using frozen oligarchs' funds as collateral for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over elected governments could be blocking the money Ukraine urgently requires.

Misleading Claims and Mounting Risks

The public was told that these scenarios were not possible. Previously, a government leader, promoting the biggest and most dangerous of all such treaties, told us: “The UK has signed trade deal after trade deal and there has not been a problem in the past.” An expert on this issue described campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that only poorer nations had to worry about these lawsuits. Warnings that “as corporations start to realise the power they now possess, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with general mockery.

That threat is now a reality. In the current period, oil and gas and mining firms have initiated a unprecedented number of suits against nations both wealthy and developing, opposing – as in the case of the Cumbrian coalmine – state efforts to prevent environmental catastrophe. Firms have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP