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What is your reckon our political system works? Maybe along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills become law. The law is maintained by the courts. End of story. Yet, that’s how it operated in the past. Not anymore.

The Rise of Secret Tribunals

Nowadays, overseas companies, along with the wealthy individuals behind them, have the power to sue nation states for the regulations they pass, at secret arbitration panels composed of business advocates. Such disputes are conducted behind closed doors. Unlike our courts, these panels allow no opportunity to appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even businesses based in this country. They are open exclusively to entities registered abroad.

Should an arbitration panel rules that a government measure might diminish the corporation’s expected profits, it may order compensation of vast sums, even billions.

These awards are based not on actual losses but money the arbitrators determine the company would perhaps have made. The government could be forced to drop the legislation. It will be hesitant to introducing similar legislation along the same lines, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being filed, as corporations take cues from each other, and investment funds fund legal actions for a share of a portion of the settlements. The result? Democratic sovereignty and popular rule are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the choices made by parliaments is that this stipulation has been inserted – without democratic mandate, and often in conditions of total confidentiality – inside international trade agreements.

A Concrete Case: The Cumbrian Coalmine

A year ago, activists secured a significant win at the senior court. The justice determined that proposals to excavate the first deep coalmine in the UK for 30 years, in northwest England, were illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have no consequence on national carbon targets. The new government then withdrew the licence the previous administration had granted. Now, this success is under threat by an offshore tribunal reporting to exclusively the companies bringing the case.

In August, a company whose beneficial owners are based in the offshore financial centre initiated proceedings against the UK government. Last week a arbitration panel in Washington DC was established to consider the case.

This firm is suing the UK for the profits it might have made if the mine had been allowed to proceed. We have no idea how much this sum represents. Which individual is acting on its behalf against the state? A sitting MP, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The government enacts a policy, the high court validates it, then a foreign company challenges it through an secretive offshore tribunal, and a elected official works for its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the coal mine dispute was convened, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. We know little of the case to date, but it seems likely that he’ll use the arbitration process to challenge the restrictions the UK enacted against him following the war in Ukraine. He has previously started suing a small nation for this reason, seeking sixteen billion dollars: equivalent to half of nation's yearly budget. Included in the lawyers acting for him in that case? Cherie Blair, spouse of the previous PM.

International law scholars contend that the EU’s procrastination in utilising seized state funds as security for its loan to Ukraine stems from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, undemocratic power over democratic administrations may be obstructing the funds Ukraine desperately needs.

Empty Promises and Growing Risks

The public was told that these scenarios wouldn’t happen. In 2014, a government leader, advocating for the biggest and most dangerous of all such treaties, stated: “The UK has signed investment treaty after trade deal and we have never seen a case in the past.” A consultant on this matter described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about these lawsuits. Predictions that “as corporations begin to understand the authority they now possess, they will redirect their efforts from the poorer states to the wealthy nations” were greeted by general mockery.

That warning has now materialised. Recently, fossil fuel and resource corporations have filed a historic level of suits against nations across the economic spectrum, opposing – similar to the Whitehaven project – state efforts to halt environmental catastrophe. Companies have thus far won $114bn by using ISDS, of which energy giants have obtained the majority. That equates to the combined GDP