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How do you understand our political system functions? Maybe something like this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills pass into law. The law is maintained by the courts. That's it. Well, that was how it used to work. Those days are over.

The Advent of Secret Arbitration Panels

In the modern era, foreign corporations, along with the oligarchs that control them, have the power to sue governments for the regulations they pass, at secret arbitration panels composed of business advocates. Such disputes are conducted behind closed doors. Unlike our courts, these tribunals allow no avenue for appeal or judicial review. Ordinary citizens are barred from bringing a case to them, nor can our government, including companies operating from this country. The door is open exclusively to businesses based overseas.

If a tribunal determines that a law or policy could harm the corporation’s projected profits, it may order compensation of hundreds of millions, even billions.

These awards are based not on actual losses but money the tribunal officials decide the company might otherwise have made. The government might be compelled to abandon its policy. It is deterred from introducing similar legislation of a similar nature, worried about incurring a lawsuit.

A System Spiralling Out of Control

Historically high figures of legal actions are being initiated, as companies learn from each other, and private equity bankroll lawsuits in exchange for a share of the settlements. The result? National sovereignty and democratic governance are becoming prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede national legislation and the decisions enacted by legislatures is that this provision has been incorporated – absent public approval, and frequently under an atmosphere of extreme secrecy – within international trade agreements.

A Concrete Example: The UK Coal Mine

Twelve months ago, environmental campaigners won a great victory at the High Court. The justice found that schemes to open the first deep coalmine in the UK for 30 years, in Cumbria, were found to be wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine could have no impact on climate commitments. The new government then withdrew the consent the former government had approved. Now, this success is under threat by an offshore tribunal reporting to no one but the companies bringing the case.

Last August, a company whose ultimate owners are located in the tax haven lodged a claim challenging the UK government. Recently a tribunal in the United States was set up to consider the case.

The company is suing the UK for the profits it could have earned if the mine had received permission to go ahead. Citizens have little idea how much this could amount to. Which individual is serving as its counsel challenging the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The administration makes a decision, the high court validates it, then a foreign company challenges it through an secretive private court, and a member of our parliament represents its behalf.

An Oligarch's Case

On the same day that the tribunal on the coal mine dispute was established, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case to date, but it appears probable that he’ll use the tribunal to contest the sanctions the UK levied against him after the Russian aggression. He has already initiated proceedings against a small nation with similar intent, seeking a colossal sum: half that government’s yearly income. Among the legal team representing him there? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s delay in using frozen state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over sovereign states might be preventing the funds Ukraine critically depends on.

Empty Promises and Growing Threats

We were assured that these events wouldn’t happen. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, told us: “The UK has signed trade agreement upon trade deal and there has not been a issue in the past.” An expert on this issue described critics of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear such legal actions. Warnings that “when companies start to realise the power bestowed upon them, they will turn their attention from the poorer states to the strong ones” were dismissed with widespread derision.

That prediction has now materialised. This year, oil and gas and extraction companies have initiated a unprecedented number of suits against nations across the economic spectrum, challenging – like the example of the UK mine – government attempts to halt climate breakdown. Corporations have thus far won $114bn by using ISDS, of which oil majors have secured $84bn. That equates to the combined GDP