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Can you understand our democratic process functions? Perhaps similar to this. We elect MPs. They vote on bills. If a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. That's it. However, that was how it operated in the past. Not anymore.

The Advent of Shadow Tribunals

In the modern era, international firms, along with the billionaires who own them, can sue governments for the policies they pass, at offshore tribunals staffed by business advocates. The cases are conducted away from public scrutiny. In contrast to domestic courts, these panels grant no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even companies based in this country. They are open solely for entities based overseas.

If a tribunal determines that a government measure might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, even billions.

This compensation represent not actual losses but money the arbitrators determine the company might otherwise have made. The state may have to abandon its policy. It becomes deterred from introducing similar legislation along the same lines, worried about being sued.

A Mechanism Spiralling Out of Control

Record numbers of disputes are being brought, as companies learn from each other, and private equity finance suits in return for a cut of the awards. The result? Sovereignty and democratic governance are now unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the choices taken by elected bodies is that this clause has been written – absent public approval, and typically amid conditions of extreme secrecy – into bilateral investment treaties.

A Specific Instance: The Whitehaven Coal Mine

A year ago, activists secured a significant win at the senior court. The justice ruled that schemes to dig the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were found to be wrongly permitted by the Conservative government, which had endorsed the extraordinary assertion that the mine would have had no consequence on our carbon budgets. The new government subsequently revoked the permission the Tories had approved. Now, this legal outcome could be compromised by an foreign court reporting to only the companies bringing the case.

In August, a corporate entity whose final controllers are based in the Cayman Islands initiated proceedings versus the UK government. The previous week a tribunal in Washington DC was established to hear it.

The company is suing the UK for the revenue it would have generated if the mine had been permitted to go ahead. The public has no clear indication how much this sum represents. Who is representing it challenging the British government? A sitting MP, and ex-law officer in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a elected official works for its behalf.

A Sanctions Case

On the same day that the tribunal on the mining lawsuit was convened, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. We know little of the case to date, but it seems likely that he’ll use the ISDS mechanism to contest the sanctions the UK imposed on him subsequent to the war in Ukraine. He has already started suing another European state with similar intent, seeking a colossal sum: equivalent to half of nation's yearly income. Part of the counsel on his side? Cherie Blair, married to the ex-UK leader.

Trade specialists believe that the EU’s delay in utilising seized Russian assets as security for its aid for Ukraine stems from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This extraordinary, secretive influence over democratic administrations might be preventing the money Ukraine desperately needs.

False Assurances and Escalating Threats

We were assured that these scenarios could not occur. In 2014, a government leader, advocating for the biggest and most dangerous of all such treaties, stated: “Britain has agreed to trade agreement upon trade deal and there has not been a problem in the past.” A consultant on this topic labelled campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states had to worry about these lawsuits. Warnings that “when companies start to realise the influence they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That warning has now materialised. This year, oil and gas and resource corporations have initiated a record number of cases against nations across the economic spectrum, challenging – similar to the UK mine – official measures to prevent climate breakdown. Corporations have to date won $114bn via ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP