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What is your understand our system of government functions? Perhaps along the lines of this. The public votes for MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. Statutes is upheld by the courts. End of story. Well, that used to be how it once functioned. No longer.

The Rise of Offshore Tribunals

In the modern era, overseas companies, along with the billionaires who own them, can sue nation states for the laws they pass, at private courts made up of commercial attorneys. The cases are conducted in secret. Unlike our courts, these panels allow no right of appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises headquartered in this country. Access is granted exclusively to businesses based overseas.

Should an arbitration panel rules that a government measure may compromise the corporation’s projected profits, it can award financial penalties of hundreds of millions, potentially billions.

These awards represent not tangible damages but funds the panel members decide the company could potentially have made. The government could be forced to drop the legislation. It is hesitant to introducing similar legislation in that area, due to the risk of facing litigation.

A Mechanism Running Rampant

Unprecedented levels of disputes are being filed, as firms learn from each other, and investment funds bankroll lawsuits for a share of a share of the awards. The outcome? National sovereignty and popular rule are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it is permitted to trump national legislation and the rulings made by elected bodies is that this stipulation has been written – without democratic mandate, and often in conditions of extreme secrecy – inside trade treaties.

A Concrete Case: The UK Coalmine

Twelve months ago, activists secured a significant win at the High Court. The justice ruled that plans to dig the first new deep coal mine in the UK for a generation, in Cumbria, were found to be wrongly permitted by the Conservative government, which had agreed to the extraordinary assertion that the mine would have had no impact on climate commitments. The new government later cancelled the permission the previous administration had granted. Today, this success could be compromised by an foreign court answering to exclusively the entities petitioning it.

Last August, a company whose ultimate owners are located in the tax haven initiated proceedings challenging the UK government. The previous week a arbitration panel in the United States was convened to adjudicate on it.

This firm is seeking compensation from the UK for the money it could have earned if the mine had been allowed to go ahead. We have no idea how much this might be. Who is acting on its behalf in opposition to the British government? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot the MP. The administration passes a law, the domestic court validates it, then a overseas corporation challenges it through an unaccountable private court, and a elected official represents its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coalmine case was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows scarce of the case so far, but it seems likely that he will utilise the ISDS mechanism to challenge the sanctions the UK enacted against him subsequent to the Russian aggression. He has started suing another European state with similar intent, seeking a colossal sum: an amount representing half government’s yearly income. Part of the counsel acting for him in that case? Cherie Blair, wife of the former British prime minister.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as guarantee for its loan to Ukraine arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, unaccountable authority over sovereign states could be blocking the funds Ukraine critically depends on.

Misleading Claims and Mounting Risks

Politicians promised that these scenarios wouldn’t happen. Previously, a former prime minister, promoting the largest and riskiest of all such treaties, told us: “Britain has agreed to investment treaty upon trade deal and there has never been a issue in the past.” A consultant on this matter accused campaigners of “scaremongering … in reality, ISDS barely touches the UK much”. The overall message appeared to be that only poorer nations should be concerned by such legal actions. Warnings that “once firms begin to understand the authority they’ve been granted, they will turn their attention from the vulnerable countries to the wealthy nations” were met with scepticism.

That prediction has come to pass. In the current period, oil and gas and resource corporations have initiated a record number of suits against nations both wealthy and developing, opposing – similar to the Whitehaven project – government attempts to halt environmental catastrophe. Companies have thus far won vast sums through ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP