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How do you understand our political system functions? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills become law. Legislation is maintained by the courts. End of story. Well, that was how it used to work. Not anymore.

The Advent of Offshore Arbitration Panels

Nowadays, international firms, and the oligarchs behind them, are able to litigate against nation states for the policies they pass, at private courts staffed by commercial attorneys. These proceedings are conducted behind closed doors. Unlike our courts, these tribunals provide no right of appeal or legal review. You or I are barred from bringing a case to them, nor can our government, including companies headquartered in this country. Access is granted only to businesses registered abroad.

Should an arbitration panel determines that a government measure may compromise the corporation’s expected profits, it can award damages of hundreds of millions of pounds, running into billions.

These sums constitute not actual losses but money the tribunal officials determine the company would perhaps have made. The administration could be forced to abandon its policy. It becomes hesitant to passing future laws in that area, due to the risk of facing litigation.

A Process Spiralling Out of Control

Historically high figures of disputes are being initiated, as firms take cues from each other, and private equity bankroll lawsuits in exchange for a cut of the settlements. The result? National sovereignty and democratic governance are now unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the decisions taken by parliaments is that this clause has been incorporated – without public consent, and frequently under conditions of profound opacity – into bilateral investment treaties.

A Specific Case: The Whitehaven Coalmine

Twelve months ago, activists won a great victory at the high court. The judge found that proposals to open the first major coal mine in the UK for three decades, in Cumbria, were unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine would have zero effect on climate commitments. The new government then withdrew the licence the Tories had issued. Currently, this victory is under threat by an offshore tribunal reporting to no one but the corporations filing the suit.

During August, a corporate entity whose beneficial owners are located in the Cayman Islands initiated proceedings against the UK government. Recently a tribunal in the US capital was convened to adjudicate on it.

This firm is suing the UK for the revenue it would have generated if the mine had been allowed to go ahead. Citizens have little idea how much this might be. What legal team is representing it against the UK administration? A sitting MP, and former attorney-general in the outgoing administration, that great patriot Sir Geoffrey Cox. The government enacts a policy, the national judiciary supports it, then a overseas corporation challenges it through an unaccountable arbitration panel, and a member of our parliament works for its behalf.

An Oligarch's Case

Concurrently that the court on the mining lawsuit was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case at present, but it is highly possible that he will utilise the arbitration process to challenge the restrictions the UK levied against him after the war in Ukraine. He has already started suing Luxembourg on these grounds, seeking $16bn: half that nation's annual revenue. Included in the lawyers representing him there? a prominent lawyer, wife of the ex-UK leader.

Trade specialists contend that the EU’s procrastination in leveraging immobilised oligarchs' funds as collateral for its financial support package arises from concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, unaccountable authority over sovereign states might be preventing the funds Ukraine critically depends on.

Misleading Claims and Escalating Costs

The public was told that these events could not occur. Previously, a senior politician, championing the biggest and most dangerous of all these agreements, told us: “The UK has signed trade agreement upon trade deal and we have never seen a issue in the past.” An adviser on this topic labelled critics of “alarmism … the fact is, ISDS has little impact on the UK much”. The overall message was crafted to be that exclusively weaker states needed to fear these lawsuits. Predictions that “when companies grasp the power bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. Recently, energy and resource corporations have initiated a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the UK mine – official measures to prevent global warming. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP