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Can you understand our system of government operates? Maybe similar to this. We elect MPs. They debate and pass bills. Should a majority is obtained, the bills become law. Statutes is upheld by the courts. That's it. Yet, that’s how it used to work. Not anymore.

The Emergence of Offshore Arbitration Panels

Today, foreign corporations, along with the billionaires who own them, can sue governments for the laws they pass, at offshore tribunals made up of business advocates. These proceedings are conducted behind closed doors. Unlike our courts, these panels provide no opportunity to appeal or judicial review. The general public are unable to file a case to them, nor can our government, including businesses based in this country. Access is granted solely for businesses based overseas.

Should an arbitration panel determines that a legislative action might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, even billions.

These awards represent not actual losses but funds the arbitrators decide the company might otherwise have made. The state might be compelled to abandon its policy. It is hesitant to introducing similar legislation in that area, worried about being sued.

A Mechanism Growing Exponentially

Historically high figures of cases are being brought, as companies take cues from each other, and investment funds finance suits for a share of a portion of the awards. The outcome? Democratic sovereignty and democratic governance are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can trump a country's own laws and the rulings made by legislatures is that this stipulation has been inserted – absent public approval, and frequently under conditions of profound opacity – within trade treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, activists secured a significant win at the senior court. The judge ruled that schemes to dig the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had accepted the bizarre claim that the mine could have no consequence on climate commitments. The incoming administration subsequently revoked the licence the previous administration had granted. Currently, this legal outcome is under threat by an secret arbitration panel reporting to only the companies bringing the case.

Last August, a company whose final controllers are located in the Cayman Islands filed a lawsuit challenging the UK government. Last week a tribunal in Washington DC was convened to consider the case.

This firm is litigating against the UK for the money it would have generated if the mine had been allowed to proceed. The public has no clear indication how much this could amount to. Which individual is representing it in opposition to the state? A member of parliament, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The government enacts a policy, the high court upholds it, then a international entity challenges it through an secretive arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Case

Concurrently that the panel on the mining lawsuit was convened, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. Details are little of the case so far, but it appears probable that he will utilise the tribunal to fight the restrictions the UK imposed on him following the war in Ukraine. He has already filed a claim against a small nation on these grounds, demanding sixteen billion dollars: equivalent to half of state's yearly income. Among the lawyers on his side? the wife of a former prime minister, spouse of the ex-UK leader.

Trade specialists argue that the EU’s procrastination in leveraging immobilised state funds as collateral for its aid for Ukraine stems from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, secretive influence over sovereign states may be obstructing the finance Ukraine critically depends on.

False Assurances and Mounting Threats

The public was told that such things wouldn’t happen. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, stated: “Britain has agreed to trade agreement after trade deal and we have never seen a problem in the past.” An expert on this topic accused critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about ISDS claims. Warnings that “as corporations grasp the power they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were met with widespread derision.

That warning is now a reality. Recently, energy and mining firms have filed a record number of claims against nations across the economic spectrum, opposing – similar to the UK mine – state efforts to prevent environmental catastrophe. Companies have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP