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What is your perceive our political system operates? It could be similar to this. We elect MPs. They legislate on bills. Should a majority is obtained, the bills pass into law. The law is upheld by the courts. Simple as that. Well, that’s how it once functioned. Not anymore.

The Emergence of Secret Arbitration Panels

Nowadays, overseas companies, along with the billionaires who own them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels made up of corporate lawyers. The cases are conducted in secret. Differing from national judiciaries, these panels grant no right of appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, or even companies based in this country. Access is granted solely for entities based overseas.

Should an arbitration panel rules that a law or policy might diminish the corporation’s expected profits, it may order damages of hundreds of millions of pounds, even billions.

These awards represent not tangible damages but compensation the arbitrators decide the company might otherwise have made. The government could be forced to rescind the measure. It becomes hesitant to introducing similar legislation in that area, due to the risk of being sued.

A Process Growing Exponentially

Unprecedented levels of legal actions are being brought, as companies take cues from each other, and investment funds fund legal actions in exchange for a share of the takings. The outcome? Democratic sovereignty and popular rule are turning into unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the rulings taken by parliaments is that this stipulation has been inserted – without public consent, and often in an atmosphere of extreme secrecy – within trade treaties.

A Real-World Instance: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The presiding officer ruled that proposals to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have no consequence on national carbon targets. The incoming administration then withdrew the consent the previous administration had issued. Now, this victory faces being overturned by an foreign court accountable to no one but the corporations petitioning it.

In August, a firm whose final controllers reside in the Cayman Islands filed a lawsuit challenging the UK government. Recently a dispute settlement body in Washington DC was set up to adjudicate on it.

This firm is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to go ahead. We have no clear indication how much this could amount to. Which individual is acting on its behalf challenging the UK administration? A member of parliament, and ex-law officer in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The administration enacts a policy, the domestic court upholds it, then a foreign company challenges it through an secretive arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the coalmine case was established, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case to date, but it seems likely that he will utilise the ISDS mechanism to contest the restrictions the UK imposed on him after the war in Ukraine. He has previously filed a claim against Luxembourg with similar intent, claiming a colossal sum: an amount representing half government’s annual revenue. Among the legal team representing him there? Cherie Blair, spouse of the previous PM.

Trade specialists believe that the EU’s hesitation in leveraging immobilised Russian assets as guarantee for its financial support package is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states could be blocking the finance Ukraine critically depends on.

False Assurances and Growing Risks

The public was told that these events were not possible. Years ago, a government leader, promoting the biggest and most dangerous of all investment pacts, declared: “We’ve signed investment treaty after trade deal and there has never been a issue in the past.” An adviser on this issue accused critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message was crafted to be that exclusively weaker states should be concerned by ISDS claims. Cautionary notes that “as corporations grasp the influence they’ve been granted, they will shift their focus from the weak nations to the wealthy nations” were met with widespread derision.

That warning has come to pass. Recently, fossil fuel and resource corporations have lodged a unprecedented number of cases against nations rich and poor, contesting – as in the case of the Whitehaven project – government attempts to stop environmental catastrophe. Corporations have to date won vast sums by using ISDS, of which oil majors have secured $84bn. That equates to the combined GDP