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How do you perceive our political system works? Maybe something like this. We elect MPs. They debate and pass bills. When a majority is achieved, the bills become law. The law are enforced by the courts. Simple as that. Well, that used to be how it used to work. Those days are over.

The Rise of Offshore Tribunals

Nowadays, overseas companies, or the wealthy individuals who own them, are able to litigate against nation states for the laws they pass, at offshore tribunals made up of corporate lawyers. Such disputes are held behind closed doors. Unlike our courts, these bodies provide no avenue for appeal or legal review. Ordinary citizens are barred from bringing a case to them, and neither can our government, including companies operating from this country. Access is granted only to entities based overseas.

Should an arbitration panel finds that a government measure might diminish the corporation’s anticipated profits, it can award compensation of hundreds of millions, potentially billions.

These awards are based not on actual losses but money the tribunal officials determine the company could potentially have made. The administration might be compelled to abandon its policy. It becomes deterred from enacting future policies along the same lines, due to the risk of incurring a lawsuit.

A System Running Rampant

Historically high figures of legal actions are being filed, as companies observe each other, and investment funds finance suits for a share of a share of the takings. The outcome? Sovereignty and popular rule are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede domestic law and the rulings enacted by parliaments is that this stipulation has been written – without public consent, and frequently under an atmosphere of total confidentiality – into trade treaties.

A Concrete Example: The Whitehaven Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The presiding officer determined that plans to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had agreed to the extraordinary assertion that the mine could have zero effect on national carbon targets. The Labour government later cancelled the licence the Tories had granted. Now, this legal outcome faces being overturned by an foreign court answering to only the companies petitioning it.

During August, a company whose beneficial owners are located in the Cayman Islands filed a lawsuit versus the UK government. The previous week a arbitration panel in the US capital was convened to consider the case.

The company is suing the UK for the money it would have generated if the mine had been permitted to proceed. We have no clear indication how much this might be. Which individual is serving as its counsel against the state? A member of parliament, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state passes a law, the high court upholds it, then a foreign company disputes it through an unaccountable private court, and a elected official works for its behalf.

The Russian Case

Simultaneously that the court on the mining lawsuit was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows nothing of the case at present, but it appears probable that he may employ the ISDS mechanism to fight the penalties the UK levied against him following the Russian aggression. He has previously filed a claim against another European state with similar intent, demanding $16bn: equivalent to half of nation's annual revenue. Part of the counsel on his side? a prominent lawyer, spouse of the previous PM.

Trade specialists argue that the EU’s hesitation in leveraging immobilised oligarchs' funds as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states could be blocking the funds Ukraine desperately needs.

False Assurances and Escalating Risks

We were assured that these scenarios could not occur. Previously, a government leader, advocating for the biggest and most dangerous of all such treaties, stated: “Britain has agreed to investment treaty upon trade deal and there has not been a case in the past.” An expert on this matter described campaigners of “alarmism … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that only poorer nations should be concerned by ISDS claims. Warnings that “as corporations start to realise the authority bestowed upon them, they will shift their focus from the vulnerable countries to the wealthy nations” were greeted by scepticism.

That warning has come to pass. In the current period, energy and resource corporations have initiated a historic level of claims against nations rich and poor, contesting – similar to the Cumbrian coalmine – state efforts to halt climate breakdown. Firms have to date won vast sums by using ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP