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Can you understand our political system functions? It could be something like this. Citizens choose MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. Well, that used to be how it operated in the past. Not anymore.

The Advent of Shadow Tribunals

Today, foreign corporations, or the oligarchs behind them, are able to litigate against elected administrations for the laws they pass, at secret arbitration panels composed of commercial attorneys. Such disputes are conducted behind closed doors. Unlike our courts, these panels allow no avenue for appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, including businesses based in this country. They are open exclusively to businesses based overseas.

Should an arbitration panel determines that a law or policy may compromise the corporation’s anticipated profits, it can award financial penalties of hundreds of millions, running into billions.

This compensation constitute not actual losses but money the panel members determine the company might otherwise have made. The administration might be compelled to drop the legislation. It will be discouraged from passing future laws in that area, due to the risk of incurring a lawsuit.

A Process Running Rampant

Record numbers of disputes are being filed, as firms take cues from each other, and hedge funds fund legal actions in return for a portion of the settlements. The result? Sovereignty and popular rule are now too costly.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the choices taken by parliaments is that this provision has been inserted – without public consent, and often in conditions of extreme secrecy – within bilateral investment treaties.

A Specific Example: The Whitehaven Coalmine

Twelve months ago, environmental campaigners won a great victory at the High Court. The judge found that schemes to dig the first new deep coal mine in the UK for 30 years, in Cumbria, were wrongly permitted by the Conservative government, which had endorsed the extraordinary assertion that the mine would have zero effect on national carbon targets. The incoming administration subsequently revoked the licence the former government had granted. Now, this legal outcome faces being overturned by an foreign court answering to exclusively the entities filing the suit.

During August, a firm whose final controllers are based in the Cayman Islands lodged a claim versus the UK government. Last week a dispute settlement body in the United States was convened to consider the case.

This firm is suing the UK for the revenue it could have earned if the mine had been allowed to commence operations. Citizens have little idea how much this could amount to. What legal team is representing it against the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration makes a decision, the high court validates it, then a overseas corporation contests it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the coal mine dispute was convened, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case to date, but it seems likely that he may employ the tribunal to challenge the sanctions the UK imposed on him after the invasion of Ukraine. He has previously initiated proceedings against Luxembourg with similar intent, claiming a colossal sum: half that nation's yearly budget. Part of the legal team acting for him in that case? Cherie Blair, married to the previous PM.

International law scholars argue that the EU’s procrastination in utilising seized oligarchs' funds as collateral for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This extraordinary, unaccountable authority over elected governments could be blocking the funds Ukraine urgently requires.

False Assurances and Growing Threats

The public was told that these events could not occur. In 2014, a senior politician, advocating for the most significant and hazardous of all such treaties, declared: “Britain has agreed to trade agreement after trade deal and there has not been a case in the past.” An expert on this topic accused critics of “exaggeration … in reality, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries should be concerned by such legal actions. Cautionary notes that “as corporations grasp the power they’ve been granted, they will shift their focus from the poorer states to the strong ones” were dismissed with scepticism.

That threat has come to pass. Recently, oil and gas and resource corporations have initiated a unprecedented number of claims against nations rich and poor, challenging – like the example of the UK mine – state efforts to halt global warming. Companies have so far won vast sums by using ISDS, of which fossil fuel companies have secured the majority. That represents the combined GDP