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What is your reckon our system of government functions? Maybe along the lines of this. We elect MPs. They debate and pass bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. That's it. Well, that was how it once functioned. Those days are over.

The Rise of Secret Arbitration Panels

Today, overseas companies, along with the oligarchs that control them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals composed of corporate lawyers. The cases take place away from public scrutiny. Unlike our courts, these tribunals allow no avenue for appeal or legal review. You or I are unable to file a case to them, just as our government, or even enterprises operating from this country. Access is granted only to businesses based overseas.

When a secret court rules that a law or policy might diminish the corporation’s anticipated profits, it may order financial penalties of hundreds of millions of pounds, running into billions.

These sums constitute not real financial harm but compensation the arbitrators determine the company could potentially have made. The state might be compelled to rescind the measure. It is deterred from introducing similar legislation in that area, worried about facing litigation.

A Process Growing Exponentially

Record numbers of disputes are being filed, as firms take cues from each other, and hedge funds bankroll lawsuits in exchange for a portion of the takings. The result? Democratic sovereignty and democratic governance are now too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump domestic law and the rulings taken by parliaments is that this clause has been inserted – without democratic mandate, and typically amid conditions of total confidentiality – inside international trade agreements.

A Real-World Instance: The Whitehaven Coal Mine

A year ago, activists secured a significant win at the high court. The judge found that plans to dig the first deep coalmine in the UK for a generation, in Cumbria, were illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no consequence on national carbon targets. The Labour government then withdrew the licence the former government had approved. Currently, this legal outcome could be compromised by an offshore tribunal accountable to no one but the companies filing the suit.

Last August, a corporate entity whose final controllers are based in the tax haven lodged a claim against the UK government. Recently a arbitration panel in the United States was set up to consider the case.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had been permitted to proceed. The public has no idea how much this could amount to. What legal team is representing it in opposition to the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The administration passes a law, the high court upholds it, then a foreign company challenges it through an secretive offshore tribunal, and a elected official acts on its behalf.

A Sanctions Challenge

On the same day that the court on the coalmine case was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows little of the case to date, but it seems likely that he will utilise the arbitration process to fight the restrictions the UK enacted against him following the Russian aggression. He has already started suing another European state on these grounds, seeking a colossal sum: half that nation's annual revenue. Part of the legal team acting for him in that case? Cherie Blair, married to the previous PM.

International law scholars believe that the EU’s delay in leveraging immobilised state funds as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, undemocratic power over sovereign states could be blocking the finance Ukraine critically depends on.

False Assurances and Escalating Costs

We were assured that such things wouldn’t happen. Previously, a senior politician, promoting the most significant and hazardous of all such treaties, told us: “Britain has agreed to investment treaty upon trade deal and we have never seen a issue in the past.” An expert on this topic described critics of “scaremongering … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries should be concerned by ISDS claims. Predictions that “once firms begin to understand the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were dismissed with scepticism.

That prediction is now a reality. Recently, fossil fuel and extraction companies have lodged a historic level of cases against nations across the economic spectrum, opposing – like the example of the UK mine – government attempts to halt environmental catastrophe. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have been awarded the majority. That is equivalent to the combined GDP