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What is your understand our political system operates? Perhaps similar to this. We elect MPs. They vote on bills. When a majority is secured, the bills are enacted as law. The law are enforced by the courts. That's it. However, that used to be how it once functioned. No longer.

The Emergence of Shadow Tribunals

In the modern era, foreign corporations, along with the oligarchs behind them, are able to litigate against governments for the regulations they pass, at secret arbitration panels staffed by commercial attorneys. These proceedings are held in secret. Differing from national judiciaries, these tribunals allow no right of appeal or judicial review. You or I are unable to file a case to them, nor can our government, including businesses headquartered in this country. They are open solely for entities based overseas.

When a secret court rules that a legislative action might diminish the corporation’s projected profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums represent not actual losses but money the tribunal officials decide the company might otherwise have made. The government could be forced to drop the legislation. It becomes discouraged from enacting future policies along the same lines, worried about facing litigation.

A System Spiralling Out of Control

Record numbers of disputes are being filed, as companies learn from each other, and investment funds bankroll lawsuits in exchange for a portion of the takings. The result? National sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the rulings taken by elected bodies is that this provision has been inserted – absent public approval, and often in an atmosphere of extreme secrecy – within international trade agreements.

A Real-World Instance: The UK Coal Mine

Last year, activists secured a significant win at the high court. The justice ruled that plans to dig the first major coal mine in the UK for 30 years, in Cumbria, had been wrongly permitted by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have had no impact on climate commitments. The Labour government then withdrew the licence the Tories had approved. Now, this legal outcome faces being overturned by an foreign court answering to no one but the corporations filing the suit.

Last August, a corporate entity whose ultimate owners are located in the offshore financial centre lodged a claim versus the UK government. The previous week a arbitration panel in the US capital was established to hear it.

The claimant is seeking compensation from the UK for the profits it could have earned if the mine had received permission to proceed. The public has no idea how much this could amount to. Who is representing it in opposition to the British government? A member of parliament, and former attorney-general in the Conservative government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court supports it, then a international entity challenges it through an unaccountable private court, and a elected official works for its behalf.

The Russian Challenge

On the same day that the court on the coalmine case was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. Details are nothing of the case so far, but it seems likely that he’ll use the ISDS mechanism to challenge the sanctions the UK enacted against him subsequent to the invasion of Ukraine. He has previously filed a claim against a small nation with similar intent, seeking sixteen billion dollars: equivalent to half of nation's yearly budget. Included in the counsel representing him there? a prominent lawyer, married to the ex-UK leader.

Legal experts contend that the EU’s hesitation in utilising seized state funds as security 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, unaccountable authority over democratic administrations might be preventing the funds Ukraine urgently requires.

False Assurances and Escalating Costs

We were assured that these scenarios were not possible. In 2014, a former prime minister, advocating for the largest and riskiest of all these agreements, declared: “Britain has agreed to investment treaty upon trade deal and we have never seen a issue in the past.” An expert on this topic accused activists of “alarmism … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by ISDS claims. Warnings that “as corporations start to realise the power they’ve been granted, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with general mockery.

That warning has come to pass. Recently, oil and gas and mining firms have filed a historic level of suits against nations rich and poor, challenging – like the example of the UK mine – state efforts to prevent global warming. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP