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How do you understand our system of government works? Maybe along the lines of this. The public votes for MPs. They vote on bills. If a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. However, that used to be how it once functioned. No longer.

The Rise of Secret Tribunals

In the modern era, overseas companies, or the billionaires who own them, can sue elected administrations for the policies they pass, at offshore tribunals staffed by corporate lawyers. Such disputes take place behind closed doors. Unlike our courts, these bodies provide no right of appeal or legal review. Ordinary citizens are unable to file a case to them, nor can our government, including enterprises operating from this country. They are open solely for entities operating from foreign soil.

When a secret court determines that a law or policy may compromise the corporation’s expected profits, it may order financial penalties of hundreds of millions, even billions.

This compensation constitute not actual losses but funds the tribunal officials determine the company could potentially have made. The government might be compelled to rescind the measure. It is deterred from passing future laws of a similar nature, worried about incurring a lawsuit.

A System 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 cut of the takings. The outcome? Democratic sovereignty and popular rule are turning into prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the decisions enacted by parliaments is that this stipulation has been written – without public consent, and frequently under an atmosphere of profound opacity – within trade treaties.

A Real-World Case: The Cumbrian Coalmine

A year ago, a conservation group achieved a major legal triumph at the high court. The justice ruled that proposals to excavate the first deep coalmine in the UK for 30 years, in northwest England, were unlawfully approved by the Conservative government, which had agreed to the bizarre claim that the mine would have had no consequence on climate commitments. The Labour government subsequently revoked the consent the previous administration had issued. Currently, this legal outcome is under threat by an secret arbitration panel reporting to only the entities petitioning it.

Last August, a corporate entity whose beneficial owners are based in the Cayman Islands initiated proceedings versus the UK government. Recently a dispute settlement body in the US capital was set up to consider the case.

This firm is suing the UK for the profits it would have generated if the mine had been allowed to proceed. The public has little idea how much this sum represents. Which individual is serving as its counsel challenging the British government? A sitting MP, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a overseas corporation challenges it through an secretive arbitration panel, and a elected official works for its behalf.

A Sanctions Challenge

Concurrently that the court on the coal mine dispute was established, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case to date, but it is highly possible that he may employ the arbitration process to contest the restrictions the UK imposed on him following the Russian aggression. He has initiated proceedings against another European state with similar intent, claiming $16bn: an amount representing half nation's yearly income. Among the lawyers on his side? a prominent lawyer, spouse of the ex-UK leader.

Legal experts argue that the EU’s hesitation in utilising seized oligarchs' funds as security for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a trade agreement. This unprecedented, undemocratic power over democratic administrations could be blocking the money Ukraine critically depends on.

False Assurances and Escalating Risks

We were assured that such things wouldn’t happen. Years ago, a senior politician, advocating for the most significant and hazardous of all such treaties, stated: “Britain has agreed to investment treaty after trade deal and there has not been a issue in the past.” An expert on this matter accused critics of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries had to worry about ISDS claims. Predictions that “once firms grasp the authority bestowed upon them, they will turn their attention from the poorer states to the developed economies” were greeted by widespread derision.

That warning is now a reality. In the current period, fossil fuel and mining firms have filed a unprecedented number of claims against nations across the economic spectrum, opposing – similar to the UK mine – official measures to prevent environmental catastrophe. Corporations have thus far won $114bn through ISDS, of which oil majors have secured $84bn. That is equivalent to the combined GDP