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What is your understand our political system operates? It could be something like this. The public votes for MPs. They vote on bills. Should a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. End of story. However, that’s how it operated in the past. Those days are over.

The Advent of Offshore Tribunals

In the modern era, international firms, along with the billionaires who own them, have the power to sue elected administrations for the laws they pass, at private courts made up of corporate lawyers. Such disputes take place in secret. In contrast to domestic courts, these bodies grant no avenue for appeal or oversight by judges. The general public are unable to file a case to them, and neither can our government, or even businesses operating from this country. The door is open exclusively to entities based overseas.

If a tribunal determines that a government measure could harm the corporation’s projected profits, it may order damages of hundreds of millions, even billions.

This compensation represent not real financial harm but compensation the panel members conclude the company would perhaps have made. The administration could be forced to rescind the measure. It becomes hesitant to introducing similar legislation in that area, for fear of being sued.

A Process Spiralling Out of Control

Record numbers of legal actions are being brought, as corporations learn from each other, and private equity bankroll lawsuits for a share of a portion of the awards. The outcome? National sovereignty and democracy are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the rulings made by legislatures is that this stipulation has been inserted – absent public approval, and frequently under an atmosphere of total confidentiality – into international trade agreements.

A Specific Case: The UK Coal Mine

Last year, activists won a great victory at the High Court. The presiding officer determined that proposals to open the first major coal mine in the UK for a generation, in northwest England, had been wrongly permitted by the outgoing administration, which had endorsed the questionable argument that the mine would have had no consequence on our carbon budgets. The new government then withdrew the licence the previous administration had issued. Now, this victory could be compromised by an offshore tribunal answering to only the corporations petitioning it.

In August, a corporate entity whose beneficial owners are based in the Cayman Islands lodged a claim against the UK government. Last week a arbitration panel in the US capital was established to hear it.

The company is litigating against the UK for the revenue it might have made if the mine had been permitted to commence operations. We have no idea how much this could amount to. What legal team is serving as its counsel in opposition to the British government? A member of parliament, and previous senior legal advisor in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the high court upholds it, then a overseas corporation disputes it through an unaccountable private court, and a elected official acts on its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the mining lawsuit was appointed, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case so far, but it seems likely that he may employ the tribunal to contest the penalties the UK levied against him after the war in Ukraine. He has previously initiated proceedings against Luxembourg with similar intent, claiming a colossal sum: equivalent to half of government’s annual revenue. Part of the counsel acting for him in that case? a prominent lawyer, spouse of the previous PM.

International law scholars argue that the EU’s delay in using frozen state funds as security for its financial support package arises from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a investment pact. This unprecedented, undemocratic power over elected governments could be blocking the funds Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that these events were not possible. Years ago, a former prime minister, advocating for the biggest and most dangerous of all such treaties, told us: “We’ve signed trade agreement after trade deal and there has never been a issue in the past.” An expert on this matter accused activists of “exaggeration … in reality, ISDS does not affect the UK much”. The overall message seemed to be that only poorer nations needed to fear ISDS claims. Warnings that “once firms grasp the authority they now possess, they will turn their attention from the poorer states to the wealthy nations” were greeted by scepticism.

That threat has now materialised. In the current period, energy and extraction companies have initiated a record number of claims against nations across the economic spectrum, opposing – similar to the Whitehaven project – government attempts to prevent climate breakdown. Companies have to date won vast sums via ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP