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What is your perceive our system of government functions? It could be something like this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills pass into law. Statutes is upheld by the courts. That's it. Well, that used to be how it used to work. Those days are over.

The Advent of Secret Arbitration Panels

Nowadays, international firms, and the oligarchs behind them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals made up of corporate lawyers. These proceedings take place in secret. Unlike our courts, these tribunals provide no right of appeal or judicial review. You or I cannot take a case to them, just as our government, or even businesses operating from this country. Access is granted solely for corporations registered abroad.

If a tribunal determines that a government measure could harm the corporation’s expected profits, it can award damages of vast sums, even billions.

These sums are based not on real financial harm but money the arbitrators conclude the company might otherwise have made. The administration might be compelled to rescind the measure. It becomes discouraged from passing future laws along the same lines, for fear of facing litigation.

A Process Running Rampant

Historically high figures of legal actions are being initiated, as companies take cues from each other, and hedge funds finance suits for a share of a cut of the awards. The outcome? National sovereignty and democracy are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump domestic law and the choices taken by parliaments is that this clause has been incorporated – without democratic mandate, and typically amid conditions of profound opacity – inside international trade agreements.

A Specific Instance: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the senior court. The justice found that plans to dig the first new deep coal mine in the UK for 30 years, in northwest England, had been wrongly permitted by the outgoing administration, which had accepted the extraordinary assertion that the mine would have zero effect on our carbon budgets. The Labour government subsequently revoked the licence the Tories had issued. Currently, this legal outcome could be compromised by an offshore tribunal accountable to exclusively the corporations petitioning it.

Last August, a firm whose ultimate owners are located in the Cayman Islands initiated proceedings versus the UK government. The previous week a arbitration panel in the US capital was established to hear it.

The claimant is suing the UK for the money it could have earned if the mine had been permitted to proceed. We have no idea how much this might be. Who is representing it against the UK administration? A sitting MP, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a international entity contests it through an unaccountable arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Case

Simultaneously that the tribunal on the coal mine dispute was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know nothing of the case so far, but it appears probable that he’ll use the ISDS mechanism to challenge the penalties the UK imposed on him after the war in Ukraine. He has previously filed a claim against another European state for this reason, demanding a colossal sum: half that nation's yearly budget. Among the counsel representing him there? Cherie Blair, spouse of the previous PM.

Trade specialists argue that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its financial support package is due to concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over democratic administrations could be blocking the finance Ukraine critically depends on.

Misleading Claims and Growing Risks

We were assured that these scenarios could not occur. Previously, a former prime minister, championing the most significant and hazardous of all these agreements, stated: “The UK has signed trade agreement upon trade deal and there has never been a issue in the past.” A consultant on this issue accused activists of “alarmism … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that only poorer nations had to worry about ISDS claims. Predictions that “when companies begin to understand the power bestowed upon them, they will shift their focus from the weak nations to the strong ones” were met with general mockery.

That threat is now a reality. This year, oil and gas and mining firms have initiated a record number of suits against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – state efforts to stop global warming. Corporations have so far won $114bn through ISDS, of which energy giants have secured $84bn. That equates to the combined GDP