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What is your understand our system of government functions? It could be similar to this. We elect MPs. They legislate on bills. When a majority is secured, the bills become law. Statutes is upheld by the courts. End of story. Well, that was how it once functioned. No longer.

The Emergence of Offshore Tribunals

Nowadays, foreign corporations, along with the billionaires that control them, are able to litigate against governments for the laws they pass, at secret arbitration panels composed of business advocates. These proceedings are conducted in secret. Differing from national judiciaries, these panels provide no avenue for appeal or legal review. The general public are unable to file a case to them, nor can our government, including companies headquartered in this country. They are open only to corporations operating from foreign soil.

Should an arbitration panel determines that a law or policy may compromise the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, potentially billions.

These awards represent not real financial harm but money the tribunal officials decide the company would perhaps have made. The administration may have to abandon its policy. It becomes deterred from enacting future policies of a similar nature, for fear of facing litigation.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being brought, as firms take cues from each other, and hedge funds fund legal actions in exchange for a share of the settlements. The outcome? Sovereignty and democratic governance are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to override national legislation and the decisions taken by legislatures is that this stipulation has been written – without public consent, and typically amid conditions of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Whitehaven Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the high court. The judge found that proposals to excavate the first new deep coal mine in the UK for a generation, in northwest England, were found to be wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have no consequence on climate commitments. The incoming administration later cancelled the permission the previous administration had issued. Currently, this success could be compromised by an foreign court answering to only the corporations bringing the case.

During August, a firm whose ultimate owners are located in the offshore financial centre initiated proceedings versus the UK government. The previous week a tribunal in the US capital was set up to consider the case.

The claimant is suing the UK for the profits it could have earned if the mine had been permitted to go ahead. We have little idea how much this sum represents. Who is representing it against the UK administration? A member of parliament, and ex-law officer in the Conservative government, the noted patriot the MP. The administration passes a law, the national judiciary upholds it, then a international entity contests it through an undemocratic private court, and a member of our parliament acts on its behalf.

A Sanctions Lawsuit

On the same day that the court on the mining lawsuit was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are little of the case so far, but it seems likely that he may employ the tribunal to contest the sanctions the UK levied against him subsequent to the invasion of Ukraine. He has started suing a small nation for this reason, demanding sixteen billion dollars: an amount representing half government’s annual revenue. Included in the lawyers representing him there? Cherie Blair, wife of the former British prime minister.

Trade specialists contend that the EU’s procrastination in utilising seized Russian assets as guarantee for its financial support package stems from concerns within Belgium that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This remarkable, secretive influence over elected governments could be blocking the funds Ukraine urgently requires.

False Assurances and Mounting Threats

The public was told that such things wouldn’t happen. Previously, a senior politician, advocating for the largest and riskiest of all investment pacts, told us: “Britain has agreed to trade deal after trade deal and there has not been a case in the past.” An adviser on this issue labelled activists of “alarmism … in reality, ISDS does not affect the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear such legal actions. Cautionary notes that “when companies begin to understand the power bestowed upon them, they will redirect their efforts from the vulnerable countries to the strong ones” were met with widespread derision.

That warning is now a reality. This year, oil and gas and extraction companies have initiated a record number of claims against nations across the economic spectrum, opposing – similar to the UK mine – official measures to stop climate breakdown. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained eighty-four billion dollars. That represents the combined GDP