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How do you reckon our system of government functions? It could be something like this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills become law. The law is upheld by the courts. That's it. Yet, that’s how it operated in the past. No longer.

The Emergence of Offshore Tribunals

Today, foreign corporations, and the billionaires that control them, have the power to sue nation states for the policies they pass, at secret arbitration panels composed of corporate lawyers. Such disputes are conducted away from public scrutiny. Unlike our courts, these panels provide no opportunity to appeal or legal review. The general public are barred from bringing a case to them, nor can our government, or even enterprises based in this country. They are open exclusively to entities operating from foreign soil.

When a secret court rules that a law or policy may compromise the corporation’s anticipated profits, it can award compensation of hundreds of millions of pounds, potentially billions.

These sums are based not on tangible damages but money the tribunal officials conclude the company might otherwise have made. The government might be compelled to abandon its policy. It becomes deterred from passing future laws in that area, due to the risk of being sued.

A Process Running Rampant

Record numbers of cases are being brought, as companies take cues from each other, and private equity bankroll lawsuits for a share of a portion of the takings. The outcome? Sovereignty and democratic governance are now too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the choices enacted by legislatures is that this stipulation has been written – without public consent, and frequently under an atmosphere of total confidentiality – into trade treaties.

A Specific Case: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The presiding officer ruled that schemes to open the first major coal mine in the UK for 30 years, in northwest England, were unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine would have had no impact on climate commitments. The incoming administration subsequently revoked the permission the previous administration had approved. Today, this victory could be compromised by an secret arbitration panel accountable to only the companies bringing the case.

Last August, a firm whose final controllers are based in the tax haven filed a lawsuit versus the UK government. The previous week a arbitration panel in the United States was established to adjudicate on it.

This firm is seeking compensation from the UK for the money it might have made if the mine had received permission to go ahead. The public has no idea how much this might be. Which individual is representing it against the state? A member of parliament, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a foreign company disputes it through an secretive arbitration panel, and a member of our parliament works for its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the mining lawsuit was convened, information emerged from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows nothing of the case at present, but it is highly possible that he will utilise the ISDS mechanism to contest the restrictions the UK imposed on him subsequent to the war in Ukraine. He has initiated proceedings against another European state on these grounds, claiming a colossal sum: an amount representing half nation's annual revenue. Part of the counsel on his side? Cherie Blair, wife of the ex-UK leader.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as collateral for its aid for Ukraine arises from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This unprecedented, unaccountable authority over elected governments might be preventing the finance Ukraine urgently requires.

Misleading Claims and Escalating Risks

We were assured that these scenarios were not possible. Years ago, a senior politician, championing the largest and riskiest of all such treaties, declared: “The UK has signed trade agreement upon trade deal and there has not been a case in the past.” A consultant on this topic described campaigners of “scaremongering … the truth is, ISDS does not affect the UK much”. The general impression was crafted to be that only poorer nations needed to fear ISDS claims. Warnings that “when companies begin to understand the power they now possess, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with widespread derision.

That prediction has now materialised. In the current period, oil and gas and resource corporations have initiated a unprecedented number of claims against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have obtained eighty-four billion dollars. That is equivalent to the combined GDP