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Can you perceive our political system operates? Maybe similar to this. The public votes for MPs. They vote on bills. When a majority is secured, the bills become law. Legislation is maintained by the courts. That's it. Yet, that was how it once functioned. Not anymore.

The Emergence of Secret Tribunals

In the modern era, foreign corporations, along with the oligarchs behind them, are able to litigate against nation states for the laws they pass, at secret arbitration panels made up of business advocates. The cases take place away from public scrutiny. Unlike our courts, these tribunals allow no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, and neither can our government, or even companies based in this country. The door is open only to corporations operating from foreign soil.

Should an arbitration panel determines that a government measure may compromise the corporation’s anticipated profits, it may order compensation of vast sums, potentially billions.

These sums are based not on real financial harm but compensation the arbitrators decide the company would perhaps have made. The administration could be forced to drop the legislation. It will be hesitant to enacting future policies in that area, for fear of facing litigation.

A Process Spiralling Out of Control

Record numbers of legal actions are being initiated, as firms learn from each other, and private equity finance suits in exchange for a share of the takings. The result? Democratic sovereignty and democratic governance are turning into prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it can trump national legislation and the decisions made by parliaments is that this provision has been inserted – without public consent, and typically amid an atmosphere of extreme secrecy – within international trade agreements.

A Specific Example: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer determined that schemes to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the outgoing administration, which had endorsed the extraordinary assertion that the mine would have no consequence on national carbon targets. The Labour government subsequently revoked the permission the previous administration had granted. Today, this victory faces being overturned by an secret arbitration panel accountable to exclusively the entities petitioning it.

During August, a corporate entity whose ultimate owners are located in the offshore financial centre lodged a claim challenging the UK government. The previous week a tribunal in the US capital was established to adjudicate on it.

This firm is litigating against the UK for the money it might have made if the mine had been allowed to commence operations. Citizens have little idea how much this could amount to. Which individual is representing it in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The government makes a decision, the national judiciary upholds it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the mining lawsuit was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. We know little of the case to date, but it seems likely that he may employ the tribunal to contest the restrictions the UK levied against him after the Russian aggression. He has already started suing another European state for this reason, demanding sixteen billion dollars: half that nation's yearly income. Among the lawyers on his side? Cherie Blair, spouse of the previous PM.

Trade specialists believe that the EU’s procrastination in utilising seized Russian assets as collateral for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This remarkable, unaccountable authority over sovereign states could be blocking the money Ukraine desperately needs.

Empty Promises and Growing Costs

The public was told that such things wouldn’t happen. In 2014, a former prime minister, championing the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to trade agreement upon trade deal and there has never been a issue in the past.” An expert on this topic labelled campaigners of “exaggeration … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that only poorer nations needed to fear these lawsuits. Warnings that “once firms start to realise the influence they’ve been granted, they will shift their focus from the weak nations to the strong ones” were met with scepticism.

That prediction has now materialised. Recently, fossil fuel and extraction companies have initiated a unprecedented number of suits against nations both wealthy and developing, contesting – similar to the Whitehaven project – official measures to stop environmental catastrophe. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP