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How do you perceive our system of government functions? Maybe along the lines of this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. Yet, that was how it once functioned. Those days are over.

The Advent of Shadow Tribunals

Nowadays, overseas companies, and the billionaires who own them, have the power to sue elected administrations for the laws they pass, at offshore tribunals staffed by corporate lawyers. Such disputes take place away from public scrutiny. In contrast to domestic courts, these tribunals provide no avenue for appeal or judicial review. The general public are unable to file a case to them, just as our government, or even enterprises operating from this country. Access is granted solely for businesses based overseas.

When a secret court rules that a law or policy might diminish the corporation’s expected profits, it may order financial penalties of hundreds of millions, potentially billions.

These sums represent not tangible damages but money the panel members determine the company could potentially have made. The state might be compelled to rescind the measure. It is hesitant to enacting future policies along the same lines, worried about being sued.

A System Spiralling Out of Control

Unprecedented levels of cases are being brought, as companies take cues from each other, and investment funds bankroll lawsuits in return for a cut of the awards. The outcome? Democratic sovereignty and democracy are turning into too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the decisions made by parliaments is that this provision has been inserted – without democratic mandate, and frequently under a climate of profound opacity – inside trade treaties.

A Real-World Example: The Whitehaven Coalmine

Twelve months ago, activists secured a significant win at the high court. The justice found that plans to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the previous government, which had agreed to the extraordinary assertion that the mine would have had zero effect on national carbon targets. The new government subsequently revoked the licence the Tories had approved. Now, this success could be compromised by an offshore tribunal accountable to only the entities petitioning it.

Last August, a corporate entity whose final controllers are based in the offshore financial centre initiated proceedings challenging the UK government. Last week a arbitration panel in Washington DC was convened to hear it.

This firm is suing the UK for the revenue it would have generated if the mine had been allowed to commence operations. We have little idea how much this sum represents. Which individual is acting on its behalf in opposition to the British government? A sitting MP, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a overseas corporation contests it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the mining lawsuit was appointed, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. The public knows scarce of the case to date, but it appears probable that he’ll use the tribunal to challenge the restrictions the UK enacted against him after the war in Ukraine. He has already filed a claim against another European state with similar intent, seeking $16bn: an amount representing half state's annual revenue. Included in the lawyers representing him there? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s delay in using frozen Russian assets as security for its financial support package is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over elected governments could be blocking the money Ukraine critically depends on.

False Assurances and Escalating Risks

We were assured that such things could not occur. Previously, a senior politician, championing the most significant and hazardous of all these agreements, stated: “Britain has agreed to trade deal after trade deal and there has not been a issue in the past.” An expert on this matter described activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries had to worry about these lawsuits. Predictions that “once firms start to realise the authority bestowed upon them, they will turn their attention from the vulnerable countries to the wealthy nations” were dismissed with widespread derision.

That warning is now a reality. In the current period, oil and gas and resource corporations have initiated a record number of suits against nations across the economic spectrum, challenging – as in the case of the UK mine – government attempts to halt environmental catastrophe. Firms have so far won $114bn via ISDS, of which energy giants have been awarded the majority. That represents the combined GDP