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How do you reckon our system of government operates? It could be along the lines of this. We elect MPs. They vote on bills. If a majority is secured, the bills pass into law. The law is upheld by the courts. Simple as that. However, that was how it used to work. No longer.

The Rise of Secret Tribunals

Nowadays, foreign corporations, along with the oligarchs that control them, have the power to sue nation states for the policies they pass, at offshore tribunals composed of business advocates. The cases are held in secret. Differing from national judiciaries, these bodies allow no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even enterprises operating from this country. Access is granted solely for entities operating from foreign soil.

If a tribunal determines that a government measure may compromise the corporation’s expected profits, it can award compensation of hundreds of millions, potentially billions.

These sums are based not on tangible damages but money the tribunal officials conclude the company might otherwise have made. The state might be compelled to rescind the measure. It will be discouraged from introducing similar legislation along the same lines, worried about facing litigation.

A Process Growing Exponentially

Historically high figures of legal actions are being filed, as corporations take cues from each other, and private equity finance suits in exchange for a portion of the takings. The outcome? Democratic sovereignty and democratic governance are turning into prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can trump national legislation and the choices enacted by legislatures is that this stipulation has been written – absent public approval, and typically amid a climate of extreme secrecy – into bilateral investment treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the high court. The judge found that proposals to open the first new deep coal mine in the UK for a generation, in northwest England, were wrongly permitted by the outgoing administration, which had accepted the bizarre claim that the mine would have zero effect on national carbon targets. The incoming administration then withdrew the permission the previous administration had granted. Now, this success could be compromised by an secret arbitration panel answering to only the entities petitioning it.

During August, a company whose final controllers are located in the Cayman Islands filed a lawsuit against the UK government. Last week a dispute settlement body in Washington DC was established to adjudicate on it.

This firm is suing the UK for the money it might have made if the mine had been permitted to go ahead. The public has no idea how much this sum represents. Which individual is serving as its counsel against the state? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a international entity challenges it through an unaccountable private court, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

Concurrently that the panel on the coalmine case was convened, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case to date, but it appears probable that he may employ the tribunal to contest the restrictions the UK levied against him after the invasion of Ukraine. He has filed a claim against Luxembourg for this reason, demanding sixteen billion dollars: half that government’s yearly budget. Among the legal team acting for him in that case? Cherie Blair, married to the previous PM.

International law scholars contend that the EU’s delay in utilising seized Russian assets as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states might be preventing the finance Ukraine urgently requires.

False Assurances and Mounting Threats

The public was told that these scenarios wouldn’t happen. Years ago, a former prime minister, championing the biggest and most dangerous of all these agreements, stated: “We’ve signed trade agreement upon trade deal and there has not been a problem in the past.” A consultant on this issue described campaigners of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative seemed to be that solely developing countries should be concerned by these lawsuits. Predictions that “once firms begin to understand the influence they now possess, they will turn their attention from the vulnerable countries to the strong ones” were met with widespread derision.

That threat is now a reality. In the current period, oil and gas and mining firms have lodged a unprecedented number of cases against nations across the economic spectrum, opposing – as in the case of the Whitehaven project – state efforts to stop climate breakdown. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have obtained $84bn. That is equivalent to the combined GDP