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Can you perceive our system of government works? Perhaps something like this. We elect MPs. They debate and pass bills. When a majority is secured, the bills become law. Legislation is upheld by the courts. End of story. Well, that’s how it operated in the past. Those days are over.

The Advent of Offshore Tribunals

Nowadays, overseas companies, or the billionaires that control them, have the power to sue elected administrations for the laws they pass, at private courts made up of commercial attorneys. The cases are conducted in secret. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. You or I are barred from bringing a case to them, just as our government, or even enterprises headquartered in this country. They are open solely for businesses registered abroad.

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

These sums constitute not actual losses but money the arbitrators conclude the company would perhaps have made. The state may have to abandon its policy. It becomes deterred from enacting future policies in that area, due to the risk of incurring a lawsuit.

A System Running Rampant

Record numbers of legal actions are being initiated, as firms observe each other, and investment funds finance suits in return for a share of the takings. The consequence? Democratic sovereignty and democracy are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump national legislation and the choices enacted by elected bodies is that this clause has been inserted – absent public approval, and often in a climate of profound opacity – within trade treaties.

A Specific Instance: The Cumbrian Coal Mine

Twelve months ago, a conservation group secured a significant win at the high court. The presiding officer found that proposals to excavate the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had accepted the bizarre claim that the mine would have had no impact on national carbon targets. The Labour government later cancelled the permission the Tories had approved. Today, this legal outcome is under threat by an offshore tribunal reporting to only the entities petitioning it.

Last August, a firm whose final controllers are located in the Cayman Islands filed a lawsuit versus the UK government. Recently a tribunal in Washington DC was set up to consider the case.

This firm is suing the UK for the revenue it might have made if the mine had been permitted to go ahead. The public has little idea how much this sum represents. Who is serving as its counsel in opposition to the British government? A sitting MP, and ex-law officer in the outgoing administration, that great patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a overseas corporation challenges it through an undemocratic arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Challenge

Simultaneously that the court on the mining lawsuit was convened, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. We know scarce of the case to date, but it is highly possible that he will utilise the tribunal to fight the restrictions the UK enacted against him after the Russian aggression. He has started suing another European state for this reason, claiming $16bn: an amount representing half nation's yearly budget. Included in the legal team acting for him in that case? a prominent lawyer, married to the ex-UK leader.

Trade specialists contend that the EU’s procrastination in leveraging immobilised Russian assets as security for its loan to Ukraine stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over elected governments may be obstructing the funds Ukraine urgently requires.

Misleading Claims and Escalating Costs

Politicians promised that these scenarios wouldn’t happen. Years ago, a senior politician, promoting the most significant and hazardous of all these agreements, stated: “We’ve signed investment treaty upon trade deal and there has not been a case in the past.” A consultant on this issue described critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by such legal actions. Warnings that “as corporations begin to understand the authority they’ve been granted, they will turn their attention from the poorer states to the strong ones” were greeted by general mockery.

That prediction has come to pass. This year, fossil fuel and mining firms have initiated a unprecedented number of claims against nations both wealthy and developing, opposing – like the example of the Whitehaven project – government attempts to stop climate breakdown. Companies have to date won vast sums by using ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP