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What is your understand our system of government functions? It could be something like this. We elect MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. The law is upheld by the courts. Simple as that. Well, that’s how it used to work. Not anymore.

The Rise of Secret Arbitration Panels

Today, foreign corporations, along with the wealthy individuals behind them, have the power to sue governments for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases are held away from public scrutiny. In contrast to domestic courts, these bodies provide no opportunity to appeal or judicial review. You or I cannot take a case to them, just as our government, or even enterprises headquartered in this country. The door is open solely for corporations registered abroad.

If a tribunal finds that a government measure may compromise the corporation’s anticipated profits, it may order financial penalties of hundreds of millions of pounds, even billions.

These sums are based not on tangible damages but funds the tribunal officials decide the company might otherwise have made. The state might be compelled to abandon its policy. It is discouraged from passing future laws along the same lines, worried about incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of disputes are being brought, as corporations learn from each other, and private equity fund legal actions for a share of a share of the takings. The outcome? Sovereignty and democracy are now prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the choices made by legislatures is that this stipulation has been inserted – without democratic mandate, and typically amid a climate of extreme secrecy – into international trade agreements.

A Specific Case: The Cumbrian Coalmine

A year ago, environmental campaigners won a great victory at the senior court. The judge ruled that plans to open the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The new government subsequently revoked the licence the former government had issued. Currently, this legal outcome could be compromised by an offshore tribunal answering to exclusively the companies filing the suit.

Last August, a firm whose beneficial owners reside in the tax haven lodged a claim against the UK government. Last week a arbitration panel in the US capital was convened to consider the case.

The claimant is litigating against the UK for the money it might have made if the mine had been allowed to proceed. Citizens have no clear indication how much this could amount to. What legal team is acting on its behalf in opposition to the British government? An elected representative, and ex-law officer in the outgoing administration, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a overseas corporation contests it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

An Oligarch's Lawsuit

On the same day that the tribunal on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. We know little of the case at present, but it appears probable that he will utilise the tribunal to challenge the sanctions the UK imposed on him after the war in Ukraine. He has initiated proceedings against Luxembourg with similar intent, claiming a colossal sum: an amount representing half state's yearly budget. Part of the legal team representing him there? Cherie Blair, wife of the previous PM.

Legal experts believe that the EU’s procrastination in utilising seized state funds as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over sovereign states may be obstructing the finance Ukraine critically depends on.

Misleading Claims and Growing Risks

We were assured that these events wouldn’t happen. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, told us: “The UK has signed trade agreement upon trade deal and we have never seen a problem in the past.” A consultant on this issue accused critics of “alarmism … the truth is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear these lawsuits. Predictions that “once firms grasp the power they’ve been granted, they will shift their focus from the weak nations to the developed economies” were greeted by widespread derision.

That threat has now materialised. In the current period, oil and gas and resource corporations have initiated a unprecedented number of suits against nations both wealthy and developing, opposing – like the example of the UK mine – official measures to prevent environmental catastrophe. Companies have so far won vast sums via ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP