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Can you understand our system of government operates? Perhaps something like this. The public votes for MPs. They vote on bills. When a majority is secured, the bills become law. Legislation is maintained by the courts. End of story. Well, that was how it operated in the past. No longer.

The Rise of Shadow Arbitration Panels

Today, international firms, and the billionaires that control them, have the power to sue governments for the laws they pass, at private courts composed of corporate lawyers. The cases take place behind closed doors. Differing from national judiciaries, these bodies allow no opportunity to appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. They are open only to entities operating from foreign soil.

If a tribunal finds that a legislative action could harm the corporation’s expected profits, it has the power to grant damages of hundreds of millions of pounds, potentially billions.

These sums are based not on actual losses but money the tribunal officials conclude the company could potentially have made. The government might be compelled to rescind the measure. It becomes discouraged from enacting future policies of a similar nature, worried about incurring a lawsuit.

A System Spiralling Out of Control

Historically high figures of disputes are being initiated, as companies observe each other, and investment funds finance suits for a share of a cut of the awards. The outcome? Sovereignty and democratic governance are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the rulings made by elected bodies is that this stipulation has been incorporated – absent public approval, and frequently under conditions of profound opacity – into international trade agreements.

A Specific Case: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the high court. The judge found that plans to excavate the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had endorsed the questionable argument that the mine could have no impact on climate commitments. The Labour government then withdrew the consent the former government had issued. Today, this legal outcome could be compromised by an foreign court accountable to exclusively the companies filing the suit.

In August, a company whose ultimate owners are based in the Cayman Islands filed a lawsuit against the UK government. Recently a dispute settlement body in the US capital was established to adjudicate on it.

This firm is suing the UK for the revenue it might have made if the mine had been permitted to proceed. Citizens have no idea how much this could amount to. Which individual is serving as its counsel challenging the state? An elected representative, and former attorney-general in the Conservative government, the noted patriot Geoffrey Cox. The state passes a law, the national judiciary validates it, then a foreign company disputes it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

The Russian Challenge

On the same day that the tribunal on the mining lawsuit was convened, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. We know scarce of the case so far, but it is highly possible that he may employ the ISDS mechanism to fight the sanctions the UK levied against him subsequent to the war in Ukraine. He has previously initiated proceedings against Luxembourg on these grounds, claiming sixteen billion dollars: half that nation's yearly budget. Among the counsel acting for him in that case? Cherie Blair, spouse of the former British prime minister.

International law scholars argue that the EU’s delay in leveraging immobilised oligarchs' funds as security for its loan to Ukraine arises from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over sovereign states might be preventing the money Ukraine urgently requires.

Misleading Claims and Growing Risks

The public was told that these events could not occur. Previously, a government leader, promoting the biggest and most dangerous of all such treaties, declared: “The UK has signed trade deal after trade deal and there has never been a problem in the past.” An adviser on this matter accused campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The overall message appeared to be that only poorer nations had to worry about such legal actions. Predictions that “as corporations start to realise the influence they’ve been granted, they will turn their attention from the vulnerable countries to the developed economies” were greeted by general mockery.

That warning has now materialised. Recently, fossil fuel and resource corporations have initiated a record number of suits against nations both wealthy and developing, contesting – like the example of the UK mine – government attempts to prevent climate breakdown. Corporations have thus far won $114bn via ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That equates to the combined GDP