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Can you perceive our political system operates? Maybe something like this. The public votes for MPs. They legislate on bills. When a majority is achieved, the bills pass into law. Legislation are enforced by the courts. That's it. Well, that used to be how it once functioned. No longer.

The Advent of Secret Tribunals

Nowadays, overseas companies, and the oligarchs that control them, have the power to sue governments for the regulations they pass, at secret arbitration panels made up of corporate lawyers. Such disputes are held away from public scrutiny. Differing from national judiciaries, these tribunals provide no opportunity to appeal or legal review. The general public are barred from bringing a case to them, and neither can our government, or even businesses operating from this country. They are open exclusively to corporations operating from foreign soil.

Should an arbitration panel determines that a legislative action could harm the corporation’s projected profits, it can award financial penalties of hundreds of millions of pounds, even billions.

This compensation constitute not real financial harm but money the panel members conclude the company might otherwise have made. The administration could be forced to abandon its policy. It is deterred from enacting future policies of a similar nature, for fear of incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being initiated, as firms take cues from each other, and private equity fund legal actions for a share of a cut of the takings. The outcome? Sovereignty and democratic governance are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump a country's own laws and the choices taken by elected bodies is that this stipulation has been inserted – without public consent, and typically amid an atmosphere of profound opacity – inside international trade agreements.

A Real-World Case: The UK Coalmine

Last year, activists secured a significant win at the high court. The judge ruled that schemes to excavate the first deep coalmine in the UK for a generation, in northwest England, were found to be unlawfully approved by the outgoing administration, which had endorsed the bizarre claim that the mine could have no consequence on climate commitments. The new government subsequently revoked the licence the previous administration had issued. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to exclusively the corporations bringing the case.

Last August, a company whose ultimate owners are based in the tax haven initiated proceedings versus the UK government. Recently a tribunal in the US capital was established to hear it.

This firm is suing the UK for the profits it might have made if the mine had been permitted to proceed. The public has no clear indication how much this might be. What legal team is acting on its behalf in opposition to the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot the MP. The government passes a law, the domestic court supports it, then a foreign company challenges it through an secretive 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 established, information emerged from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know little of the case so far, but it seems likely that he will utilise the arbitration process to challenge the restrictions the UK levied against him following the invasion of Ukraine. He has already started suing another European state for this reason, demanding a colossal sum: an amount representing half nation's annual revenue. Included in the lawyers representing him there? Cherie Blair, spouse of the previous PM.

Trade specialists argue that the EU’s delay in using frozen state funds as guarantee for its financial support package stems from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, unaccountable authority over elected governments could be blocking the money Ukraine critically depends on.

False Assurances and Growing Costs

We were assured that such things were not possible. In 2014, a government leader, championing the most significant and hazardous of all investment pacts, stated: “We’ve signed trade agreement upon trade deal and we have never seen a case in the past.” An expert on this matter described campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about these lawsuits. Cautionary notes that “when companies grasp the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the developed economies” were dismissed with widespread derision.

That prediction has now materialised. In the current period, oil and gas and resource corporations have filed a record number of cases against nations rich and poor, contesting – similar to the UK mine – state efforts to prevent global warming. Companies have thus far won vast sums by using ISDS, of which energy giants have obtained the majority. That is equivalent to the combined GDP