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How do you reckon our system of government works? Maybe along the lines of this. We elect MPs. They debate and pass bills. If a majority is obtained, the bills become law. The law are enforced by the courts. Simple as that. Well, that was how it once functioned. Those days are over.

The Rise of Secret Arbitration Panels

Today, foreign corporations, along with the oligarchs that control them, are able to litigate against nation states for the regulations they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are conducted behind closed doors. Unlike our courts, these tribunals grant no opportunity to appeal or legal review. You or I are barred from bringing a case to them, and neither can our government, or even companies operating from this country. The door is open exclusively to entities registered abroad.

Should an arbitration panel determines that a law or policy might diminish the corporation’s anticipated profits, it can award compensation of vast sums, even billions.

These sums represent not tangible damages but compensation the tribunal officials determine the company could potentially have made. The state could be forced to rescind the measure. It becomes hesitant to introducing similar legislation of a similar nature, worried about facing litigation.

A System Growing Exponentially

Historically high figures of cases are being brought, as firms take cues from each other, and hedge funds bankroll lawsuits in exchange for a portion of the awards. The result? Sovereignty and democracy are becoming too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the rulings taken by parliaments is that this stipulation has been written – without public consent, and typically amid a climate of extreme secrecy – within bilateral investment treaties.

A Specific Case: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the High Court. The presiding officer found that proposals to excavate the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine would have had no impact on our carbon budgets. The Labour government later cancelled the permission the Tories had issued. Now, this success could be compromised by an offshore tribunal accountable to no one but the entities bringing the case.

In August, a corporate entity whose ultimate owners are located in the tax haven filed a lawsuit versus the UK government. Recently a dispute settlement body in the United States was convened to consider the case.

The company is seeking compensation from the UK for the profits it could have earned if the mine had been allowed to proceed. Citizens have little idea how much this could amount to. Which individual is serving as its counsel in opposition to the British government? An elected representative, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The government passes a law, the domestic court upholds it, then a international entity challenges it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the coalmine case was appointed, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. We know little of the case at present, but it seems likely that he’ll use the tribunal to contest the sanctions the UK imposed on him following the invasion of Ukraine. He has started suing a small nation on these grounds, claiming sixteen billion dollars: equivalent to half of state's annual revenue. Included in the legal team acting for him in that case? Cherie Blair, married to the previous PM.

Legal experts contend that the EU’s hesitation in using frozen state funds as guarantee for its financial support package stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments may be obstructing the funds Ukraine urgently requires.

Misleading Claims and Growing Costs

We were assured that these events could not occur. Years ago, a former prime minister, promoting the most significant and hazardous of all these agreements, declared: “We’ve signed investment treaty after trade deal and there has never been a issue in the past.” A consultant on this matter described activists of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “as corporations begin to understand the influence bestowed upon them, they will turn their attention from the vulnerable countries to the wealthy nations” were dismissed with general mockery.

That threat is now a reality. Recently, oil and gas and mining firms have initiated a unprecedented number of suits against nations across the economic spectrum, challenging – like the example of the Whitehaven project – official measures to stop environmental catastrophe. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP