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What is your reckon our system of government functions? It could be something like this. We elect MPs. They legislate on bills. Should a majority is achieved, the bills pass into law. Legislation is maintained by the courts. That's it. Well, that was how it used to work. Not anymore.

The Advent of Offshore Arbitration Panels

Today, foreign corporations, and the oligarchs who own them, are able to litigate against governments for the policies they pass, at offshore tribunals made up of commercial attorneys. Such disputes are held behind closed doors. Differing from national judiciaries, these tribunals provide no right of appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, or even businesses operating from this country. Access is granted solely for corporations based overseas.

Should an arbitration panel rules that a government measure may compromise the corporation’s anticipated profits, it can award compensation of vast sums, even billions.

These sums constitute not tangible damages but funds the arbitrators conclude the company could potentially have made. The government might be compelled to abandon its policy. It becomes deterred from enacting future policies of a similar nature, for fear of being sued.

A System Spiralling Out of Control

Unprecedented levels of cases are being brought, as firms observe each other, and private equity finance suits for a share of a portion of the takings. The outcome? National sovereignty and popular rule are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override national legislation and the choices enacted by elected bodies is that this stipulation has been incorporated – without public consent, and typically amid conditions of total confidentiality – into international trade agreements.

A Concrete Example: The Whitehaven Coalmine

Twelve months ago, a conservation group secured a significant win at the high court. The justice found that schemes to excavate the first new deep coal mine in the UK for a generation, in Cumbria, were found to be unlawfully approved by the Conservative government, which had accepted the bizarre claim that the mine could have zero effect on our carbon budgets. The new government then withdrew the consent the previous administration had granted. Currently, this legal outcome faces being overturned by an offshore tribunal accountable to exclusively the corporations filing the suit.

Last August, a corporate entity whose ultimate owners are based in the offshore financial centre initiated proceedings versus the UK government. Last week a dispute settlement body in the US capital was set up to hear it.

The company is litigating against the UK for the money it would have generated if the mine had received permission to go ahead. Citizens have little idea how much this might be. What legal team is representing it against the UK administration? An elected representative, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a overseas corporation challenges it through an secretive arbitration panel, and a elected official works for its behalf.

A Sanctions Challenge

On the same day that the tribunal on the coalmine case was established, information emerged from a parliamentary answer that the UK is also being sued 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 arbitration process to contest the sanctions the UK imposed on him subsequent to the invasion of Ukraine. He has filed a claim against Luxembourg with similar intent, demanding $16bn: equivalent to half of nation's yearly income. Among the legal team acting for him in that case? Cherie Blair, married to the former British prime minister.

Legal experts believe that the EU’s hesitation in leveraging immobilised Russian assets as security for its loan to Ukraine arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over elected governments could be blocking the funds Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these scenarios could not occur. In 2014, a former prime minister, promoting the largest and riskiest of all these agreements, stated: “Britain has agreed to trade deal after trade deal and we have never seen a problem in the past.” An adviser on this issue described critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “when companies begin to understand the power they’ve been granted, they will shift their focus from the poorer states to the developed economies” were dismissed with general mockery.

That threat has now materialised. Recently, fossil fuel and mining firms have initiated a record number of cases against nations rich and poor, contesting – like the example of the Whitehaven project – official measures to stop global warming. Companies have thus far won one hundred and fourteen billion dollars via ISDS, of which oil majors have been awarded the majority. That represents the combined GDP