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What is your reckon our political system functions? Perhaps similar to this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. End of story. Well, that used to be how it used to work. Those days are over.

The Advent of Secret Tribunals

Nowadays, overseas companies, or the billionaires who own them, can sue nation states for the regulations they pass, at secret arbitration panels made up of corporate lawyers. The cases are held behind closed doors. In contrast to domestic courts, these tribunals grant no opportunity to appeal or judicial review. The general public cannot take a case to them, and neither can our government, including enterprises operating from this country. They are open solely for businesses operating from foreign soil.

When a secret court determines that a government measure could harm the corporation’s projected profits, it has the power to grant damages of vast sums, even billions.

This compensation constitute not actual losses but money the arbitrators decide the company would perhaps have made. The government could be forced to rescind the measure. It will be deterred from introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A System Spiralling Out of Control

Record numbers of legal actions are being filed, as corporations take cues from each other, and investment funds finance suits for a share of a portion of the takings. The outcome? National sovereignty and democratic governance are becoming prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump a country's own laws and the choices enacted by legislatures is that this stipulation has been inserted – without public consent, and frequently under conditions of extreme secrecy – inside bilateral investment treaties.

A Specific Instance: The UK Coalmine

A year ago, a conservation group secured a significant win at the senior court. The presiding officer ruled that proposals to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine would have had no consequence on national carbon targets. The Labour government then withdrew the permission the Tories had approved. Now, this victory could be compromised by an secret arbitration panel accountable to only the corporations petitioning it.

Last August, a corporate entity whose final controllers are located in the Cayman Islands lodged a claim challenging the UK government. Recently a dispute settlement body in Washington DC was set up to hear it.

The claimant is litigating against the UK for the profits it could have earned if the mine had received permission to commence operations. We have no clear indication how much this sum represents. Which individual is serving as its counsel in opposition to the British government? An elected representative, and ex-law officer in the previous government, the noted patriot the MP. The administration passes a law, the high court supports it, then a overseas corporation challenges it through an unaccountable private court, and a member of our parliament represents its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coal mine dispute was appointed, information emerged from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case to date, but it is highly possible that he will utilise the tribunal to contest the sanctions the UK enacted against him following the invasion of Ukraine. He has already filed a claim against another European state with similar intent, demanding a colossal sum: an amount representing half nation's yearly budget. Part of the legal team representing him there? a prominent lawyer, wife of the ex-UK leader.

Legal experts believe that the EU’s procrastination in leveraging immobilised state funds as guarantee for its financial support package arises from concerns within Belgium that it could be sued in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over democratic administrations may be obstructing the money Ukraine urgently requires.

False Assurances and Mounting Risks

The public was told that these events could not occur. Previously, a government leader, advocating for the most significant and hazardous of all these agreements, told us: “Britain has agreed to trade agreement after trade deal and there has never been a problem in the past.” A consultant on this issue labelled activists of “exaggeration … the fact is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that only poorer nations should be concerned by ISDS claims. Predictions that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the developed economies” were dismissed with widespread derision.

That threat has now materialised. This year, fossil fuel and mining firms have lodged a historic level of cases against nations both wealthy and developing, contesting – like the example of the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Firms have to date won $114bn by using ISDS, of which energy giants have been awarded the majority. That is equivalent to the combined GDP