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What is your perceive our political system operates? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. Yet, that was how it operated in the past. Those days are over.

The Emergence of Secret Arbitration Panels

Nowadays, overseas companies, along with the oligarchs that control them, are able to litigate against nation states for the laws they pass, at secret arbitration panels made up of business advocates. These proceedings are held in secret. Unlike our courts, these panels grant no right of appeal or oversight by judges. You or I cannot take a case to them, nor can our government, or even enterprises headquartered in this country. They are open exclusively to corporations registered abroad.

Should an arbitration panel determines that a legislative action may compromise the corporation’s projected profits, it can award compensation of hundreds of millions, potentially billions.

This compensation represent not tangible damages but money the tribunal officials decide the company would perhaps have made. The state may have to drop the legislation. It is deterred from introducing similar legislation along the same lines, worried about facing litigation.

A Mechanism Running Rampant

Record numbers of disputes are being initiated, as companies take cues from each other, and investment funds fund legal actions in exchange for a cut of the awards. The result? National sovereignty and democracy are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the rulings enacted by elected bodies is that this provision has been written – absent public approval, and often in a climate of extreme secrecy – into trade treaties.

A Specific Instance: The Whitehaven Coalmine

A year ago, activists secured a significant win at the High Court. The judge ruled that schemes to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine could have no consequence on climate commitments. The Labour government subsequently revoked the licence the former government had granted. Now, this victory is under threat by an offshore tribunal answering to no one but the companies petitioning it.

Last August, a firm whose ultimate owners are based in the tax haven initiated proceedings against the UK government. Last week a tribunal in Washington DC was convened to hear it.

The claimant is suing the UK for the profits it might have made if the mine had been permitted to proceed. We have no clear indication how much this sum represents. Which individual is representing it in opposition to the state? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot the MP. The government enacts a policy, the national judiciary upholds it, then a foreign company challenges it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

A Sanctions Case

Simultaneously that the court on the mining lawsuit was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. The public knows little of the case at present, but it appears probable that he may employ the ISDS mechanism to fight the restrictions the UK imposed on him after the invasion of Ukraine. He has filed a claim against another European state for this reason, demanding $16bn: an amount representing half state's yearly budget. Among the lawyers on his side? Cherie Blair, spouse of the previous PM.

Legal experts believe that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This extraordinary, undemocratic power over democratic administrations might be preventing the finance Ukraine urgently requires.

False Assurances and Growing Threats

We were assured that these scenarios were not possible. In 2014, a government leader, advocating for the most significant and hazardous of all such treaties, stated: “Britain has agreed to trade agreement after trade deal and there has not been a issue in the past.” An expert on this issue accused campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The overall message seemed to be that exclusively weaker states had to worry about ISDS claims. Cautionary notes that “when companies start to realise the authority they now possess, they will turn their attention from the weak nations to the developed economies” were met with scepticism.

That warning is now a reality. Recently, oil and gas and mining firms have filed a historic level of cases against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – official measures to stop climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That equates to the combined GDP