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How do you perceive our system of government works? Maybe along the lines of this. We elect MPs. They vote on bills. Should a majority is obtained, the bills are enacted as law. The law is maintained by the courts. That's it. Well, that used to be how it used to work. No longer.

The Advent of Secret Tribunals

In the modern era, international firms, along with the billionaires behind them, are able to litigate against elected administrations for the policies they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held behind closed doors. Unlike our courts, these bodies grant no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, and neither can our government, or even companies operating from this country. The door is open only to entities based overseas.

Should an arbitration panel determines that a law or policy may compromise the corporation’s expected profits, it can award damages of hundreds of millions, running into billions.

These sums represent not actual losses but funds the arbitrators determine the company might otherwise have made. The administration might be compelled to rescind the measure. It becomes hesitant to introducing similar legislation along the same lines, worried about being sued.

A Mechanism Growing Exponentially

Record numbers of cases are being brought, as corporations learn from each other, and investment funds fund legal actions in exchange for a cut of the awards. The result? Sovereignty and democracy are now unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the rulings taken by elected bodies is that this clause has been incorporated – without public consent, and often in an atmosphere of total confidentiality – into international trade agreements.

A Concrete Instance: The Whitehaven Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for a generation, in northwest England, were wrongly permitted by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have zero effect on national carbon targets. The Labour government subsequently revoked the licence the Tories had approved. Now, this legal outcome faces being overturned by an offshore tribunal reporting to exclusively the companies filing the suit.

In August, a corporate entity whose ultimate owners are located in the offshore financial centre initiated proceedings challenging the UK government. The previous week a tribunal in the United States was set up to hear it.

This firm is suing the UK for the revenue it could have earned if the mine had been allowed to commence operations. We have little idea how much this might be. What legal team is representing it challenging the state? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The administration passes a law, the domestic court upholds it, then a foreign company contests it through an secretive offshore tribunal, and a elected official acts on its behalf.

The Russian Challenge

Simultaneously that the tribunal on the coal mine dispute was convened, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. The public knows scarce of the case so far, but it is highly possible that he will utilise the arbitration process to fight the penalties the UK imposed on him subsequent to the Russian aggression. He has already started suing another European state with similar intent, claiming $16bn: equivalent to half of nation's yearly budget. Included in the legal team representing him there? the wife of a former prime minister, wife of the ex-UK leader.

Legal experts believe that the EU’s hesitation in utilising seized state funds as collateral for its financial support package arises from concerns within Belgium that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This remarkable, secretive influence over elected governments could be blocking the money Ukraine desperately needs.

False Assurances and Escalating Threats

Politicians promised that these scenarios wouldn’t happen. Previously, a government leader, advocating for the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade deal after trade deal and there has not been a problem in the past.” An adviser on this matter described critics of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries needed to fear such legal actions. Warnings that “when companies start to realise the authority they now possess, they will redirect their efforts from the poorer states to the strong ones” were met with widespread derision.

That prediction has now materialised. This year, energy and extraction companies have initiated a historic level of suits against nations both wealthy and developing, challenging – similar to the Whitehaven project – official measures to stop environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have secured eighty-four billion dollars. That represents the combined GDP