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What is your understand our political system works? Maybe similar to this. Citizens choose MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Legislation is upheld by the courts. That's it. Yet, that’s how it used to work. No longer.

The Rise of Offshore Tribunals

Today, foreign corporations, along with the wealthy individuals that control them, have the power to sue governments for the regulations they pass, at secret arbitration panels staffed by commercial attorneys. The cases take place behind closed doors. Differing from national judiciaries, these panels provide no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, just as our government, including companies based in this country. They are open exclusively to businesses based overseas.

If a tribunal rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, even billions.

These sums constitute not real financial harm but funds the panel members determine the company would perhaps have made. The administration may have to rescind the measure. It will be deterred from passing future laws of a similar nature, worried about incurring a lawsuit.

A System Running Rampant

Record numbers of disputes are being filed, as firms take cues from each other, and investment funds finance suits for a share of a cut of the awards. The outcome? National sovereignty and popular rule are turning into too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override domestic law and the decisions enacted by parliaments is that this clause has been written – absent public approval, and typically amid conditions of profound opacity – inside trade treaties.

A Concrete Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners won a great victory at the high court. The judge determined that proposals to dig the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have no impact on national carbon targets. The new government then withdrew the consent the previous administration had issued. Today, this victory faces being overturned by an offshore tribunal accountable to no one but the corporations filing the suit.

In August, a corporate entity whose beneficial owners reside in the tax haven initiated proceedings against the UK government. Last week a tribunal in Washington DC was set up to adjudicate on it.

This firm is litigating against the UK for the profits it would have generated if the mine had been permitted to go ahead. We have no clear indication how much this might be. What legal team is representing it against the British government? A sitting MP, and former attorney-general in the Conservative government, that great patriot the MP. The administration makes a decision, the national judiciary validates it, then a international entity contests it through an undemocratic arbitration panel, and a member of our parliament works for its behalf.

The Russian Lawsuit

Concurrently that the panel on the coal mine dispute was established, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case at present, but it is highly possible that he’ll use the tribunal to fight the restrictions the UK levied against him following the Russian aggression. He has already initiated proceedings against a small nation on these grounds, demanding $16bn: equivalent to half of government’s annual revenue. Part of the lawyers acting for him in that case? Cherie Blair, married to the previous PM.

Legal experts believe that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations might be preventing the money Ukraine desperately needs.

False Assurances and Growing Threats

The public was told that these scenarios wouldn’t happen. Years ago, a government leader, promoting the most significant and hazardous of all investment pacts, declared: “We’ve signed investment treaty upon trade deal and we have never seen a issue in the past.” An expert on this issue described campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that only poorer nations should be concerned by such legal actions. Predictions that “as corporations grasp the authority bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were met with scepticism.

That prediction has come to pass. Recently, oil and gas and extraction companies have initiated a unprecedented number of cases against nations rich and poor, opposing – similar to the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That represents the combined GDP