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What is your understand our political system works? Perhaps something like this. We elect MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. That's it. Yet, that’s how it used to work. No longer.

The Rise of Secret Arbitration Panels

In the modern era, overseas companies, along with the billionaires that control them, have the power to sue nation states for the regulations they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are conducted away from public scrutiny. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, just as our government, or even businesses based in this country. Access is granted exclusively to entities registered abroad.

If a tribunal determines that a government measure may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, potentially billions.

This compensation constitute not real financial harm but funds the arbitrators decide the company would perhaps have made. The government could be forced to abandon its policy. It becomes discouraged from enacting future policies in that area, due to the risk of incurring a lawsuit.

A System Running Rampant

Historically high figures of legal actions are being initiated, as companies observe each other, and investment funds bankroll lawsuits in exchange for a cut of the awards. The result? National sovereignty and popular rule are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the rulings taken by parliaments is that this stipulation has been incorporated – without public consent, and often in a climate of total confidentiality – into bilateral investment treaties.

A Specific Instance: The Whitehaven Coalmine

Last year, activists secured a significant win at the High Court. The justice determined that plans to open the first major coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have zero effect on climate commitments. The incoming administration then withdrew the licence the Tories had approved. Now, this victory could be compromised by an offshore tribunal reporting to exclusively the companies bringing the case.

In August, a firm whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in Washington DC was established to hear it.

The claimant is suing the UK for the revenue it might have made if the mine had been allowed to proceed. We have little idea how much this sum represents. Which individual is representing it challenging the British government? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a overseas corporation challenges it through an unaccountable offshore tribunal, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

Concurrently that the court on the coalmine case was convened, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case so far, but it appears probable that he’ll use the tribunal to contest the sanctions the UK imposed on him after the invasion of Ukraine. He has previously filed a claim against Luxembourg with similar intent, seeking a colossal sum: equivalent to half of nation's yearly budget. Included in the lawyers acting for him in that case? Cherie Blair, married to the former British prime minister.

Legal experts contend that the EU’s hesitation in leveraging immobilised Russian assets as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over democratic administrations may be obstructing the money Ukraine desperately needs.

Empty Promises and Growing Threats

The public was told that such things wouldn’t happen. Years ago, a senior politician, championing the biggest and most dangerous of all investment pacts, told us: “The UK has signed investment treaty after trade deal and there has not been a issue in the past.” A consultant on this issue described campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “once firms begin to understand the authority bestowed upon them, they will shift their focus from the poorer states to the wealthy nations” were greeted by general mockery.

That prediction has now materialised. Recently, oil and gas and extraction companies have filed a unprecedented number of cases against nations across the economic spectrum, challenging – as in the case of the Cumbrian coalmine – government attempts to stop climate breakdown. Firms have so far won $114bn via ISDS, of which fossil fuel companies have obtained the majority. That is equivalent to the combined GDP