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What is your understand our political system functions? Perhaps similar to this. Citizens choose MPs. They vote on bills. When a majority is achieved, the bills become law. Legislation are enforced by the courts. That's it. However, that’s how it once functioned. Not anymore.

The Rise of Offshore Tribunals

Nowadays, foreign corporations, and the oligarchs that control them, are able to litigate against elected administrations for the laws they pass, at secret arbitration panels staffed by commercial attorneys. These proceedings are conducted behind closed doors. Unlike our courts, these tribunals grant no right of appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even enterprises based in this country. They are open exclusively to entities based overseas.

When a secret court finds that a government measure might diminish the corporation’s anticipated profits, it may order damages of hundreds of millions of pounds, potentially billions.

These awards constitute not tangible damages but money the arbitrators determine the company would perhaps have made. The government might be compelled to abandon its policy. It becomes discouraged from enacting future policies of a similar nature, for fear of being sued.

A System Growing Exponentially

Record numbers of legal actions are being brought, as companies observe each other, and investment funds fund legal actions in exchange for a share of the takings. The result? National sovereignty and democratic governance are now unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the rulings made by parliaments is that this provision has been written – without democratic mandate, and frequently under an atmosphere of profound opacity – into trade treaties.

A Specific Example: The Whitehaven Coal Mine

A year ago, activists achieved a major legal triumph at the High Court. The presiding officer found that schemes to excavate the first major coal mine in the UK for 30 years, in northwest England, had been wrongly permitted by the previous government, which had accepted the questionable argument that the mine would have had zero effect on climate commitments. The incoming administration subsequently revoked the permission the Tories had granted. Today, this legal outcome is under threat by an foreign court accountable to only the entities petitioning it.

Last August, a corporate entity whose ultimate owners are based in the Cayman Islands filed a lawsuit challenging the UK government. The previous week a tribunal in the United States was set up to hear it.

The claimant is seeking compensation from the UK for the revenue 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 state? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a overseas corporation contests it through an undemocratic arbitration panel, and a elected official acts on its behalf.

The Russian Challenge

On the same day that the court on the mining lawsuit was appointed, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case at present, but it seems likely that he may employ the arbitration process to challenge the restrictions the UK enacted against him after the Russian aggression. He has already initiated proceedings against another European state on these grounds, demanding sixteen billion dollars: equivalent to half of state's annual revenue. Among the counsel acting for him in that case? a prominent lawyer, spouse of the previous PM.

International law scholars contend that the EU’s hesitation in utilising seized oligarchs' funds as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over democratic administrations could be blocking the money Ukraine urgently requires.

Misleading Claims and Growing Threats

We were assured that these scenarios wouldn’t happen. Previously, a senior politician, advocating for the largest and riskiest of all investment pacts, declared: “Britain has agreed to investment treaty after trade deal and there has not been a problem in the past.” A consultant on this topic accused campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries needed to fear ISDS claims. Warnings that “once firms grasp the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. This year, oil and gas and mining firms have initiated a unprecedented number of suits against nations rich and poor, challenging – like the example of the Cumbrian coalmine – government attempts to stop environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have secured the majority. That equates to the combined GDP