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What is your understand our system of government functions? Perhaps along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Legislation are enforced by the courts. End of story. Yet, that was how it used to work. Not anymore.

The Rise of Secret Arbitration Panels

In the modern era, foreign corporations, along with the wealthy individuals that control them, are able to litigate against nation states for the regulations they pass, at private courts staffed by business advocates. The cases are conducted away from public scrutiny. Differing from national judiciaries, these tribunals allow no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, and neither can our government, including enterprises headquartered in this country. Access is granted exclusively to corporations based overseas.

When a secret court finds that a government measure might diminish the corporation’s expected profits, it can award financial penalties of vast sums, even billions.

These sums are based not on tangible damages but money the tribunal officials decide the company would perhaps have made. The administration might be compelled to rescind the measure. It becomes deterred from introducing similar legislation in that area, due to the risk of being sued.

A Process Spiralling Out of Control

Historically high figures of legal actions are being brought, as corporations learn from each other, and investment funds fund legal actions in exchange for a share of the awards. The outcome? National sovereignty and democratic governance are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the decisions taken by parliaments is that this clause has been written – without democratic mandate, and often in conditions of total confidentiality – within trade treaties.

A Specific Instance: The Cumbrian Coal Mine

Last year, environmental campaigners won a great victory at the senior court. The justice ruled that proposals to excavate the first major coal mine in the UK for a generation, in Cumbria, were illegally sanctioned by the outgoing administration, which had agreed to the bizarre claim that the mine could have zero effect on climate commitments. The new government subsequently revoked the permission the previous administration had approved. Currently, this victory could be compromised by an foreign court reporting to no one but the entities filing the suit.

In August, a corporate entity whose ultimate owners are located in the Cayman Islands initiated proceedings versus the UK government. Recently a dispute settlement body in the US capital was set up to adjudicate on it.

The claimant is suing the UK for the revenue it could have earned if the mine had received permission to go ahead. We have no idea how much this could amount to. Which individual is serving as its counsel challenging the UK administration? A member of parliament, and ex-law officer in the previous government, that great patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the panel 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 oligarch, an oligarch. Details are nothing of the case so far, but it appears probable that he may employ the tribunal to contest the restrictions the UK enacted against him following the war in Ukraine. He has previously initiated proceedings against another European state with similar intent, seeking a colossal sum: an amount representing half government’s yearly income. Among the legal team on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its loan to Ukraine stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a investment pact. This unprecedented, unaccountable authority over democratic administrations could be blocking the funds Ukraine urgently requires.

False Assurances and Escalating Risks

Politicians promised that such things wouldn’t happen. Previously, a former prime minister, championing the most significant and hazardous of all these agreements, declared: “The UK has signed trade agreement after trade deal and we have never seen a case in the past.” An adviser on this topic labelled critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression appeared to be that only poorer nations should be concerned by these lawsuits. Cautionary notes that “as corporations begin to understand the authority they’ve been granted, they will shift their focus from the weak nations to the strong ones” were greeted by scepticism.

That warning is now a reality. In the current period, energy and extraction companies have lodged a record number of claims against nations across the economic spectrum, opposing – similar to the Whitehaven project – official measures to halt environmental catastrophe. Corporations have thus far won $114bn via ISDS, of which energy giants have secured eighty-four billion dollars. That represents the combined GDP