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What is your understand our system of government functions? Perhaps something like this. We elect MPs. They debate and pass bills. If a majority is achieved, the bills are enacted as law. Legislation are enforced by the courts. That's it. Yet, that’s how it once functioned. No longer.

The Rise of Secret Tribunals

Today, foreign corporations, or the billionaires who own them, are able to litigate against elected administrations for the laws they pass, at private courts staffed by business advocates. Such disputes take place behind closed doors. Differing from national judiciaries, these tribunals allow no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, or even enterprises operating from this country. The door is open only to businesses based overseas.

If a tribunal finds that a law or policy might diminish the corporation’s projected profits, it can award damages of hundreds of millions, running into billions.

These awards constitute not tangible damages but money the arbitrators determine the company could potentially have made. The government might be compelled to abandon its policy. It is deterred from introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A System Spiralling Out of Control

Unprecedented levels of disputes are being brought, as companies observe each other, and investment funds bankroll lawsuits in exchange for a cut of the settlements. The outcome? Sovereignty and democracy are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the choices enacted by legislatures is that this clause has been written – absent public approval, and often in a climate of profound opacity – into trade treaties.

A Specific Case: The UK Coal Mine

Twelve months ago, activists won a great victory at the High Court. The presiding officer found that proposals to open the first new deep coal mine in the UK for 30 years, in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine would have no impact on national carbon targets. The incoming administration later cancelled the permission the former government had approved. Today, this legal outcome could be compromised by an foreign court accountable to exclusively the entities bringing the case.

During August, a firm whose beneficial owners are based in the tax haven lodged a claim against the UK government. Recently a arbitration panel in the United States was convened to hear it.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had received permission to go ahead. We have little idea how much this could amount to. What legal team is serving as its counsel challenging the UK administration? A sitting MP, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The state passes a law, the domestic court validates it, then a international entity disputes it through an secretive private court, and a member of our parliament acts on its behalf.

An Oligarch's Case

Concurrently that the court on the coalmine case was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are little of the case so far, but it is highly possible that he’ll use the tribunal to fight the penalties the UK imposed on him subsequent to the Russian aggression. He has already started suing Luxembourg with similar intent, demanding a colossal sum: half that government’s yearly budget. Among the lawyers acting for him in that case? a prominent lawyer, married to the former British prime minister.

Trade specialists contend that the EU’s delay in using frozen state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This unprecedented, unaccountable authority over elected governments could be blocking the funds Ukraine critically depends on.

Empty Promises and Growing Costs

Politicians promised that these scenarios were not possible. Previously, a senior politician, promoting the most significant and hazardous of all these agreements, stated: “Britain has agreed to investment treaty after trade deal and there has not been a issue in the past.” A consultant on this topic labelled campaigners of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states should be concerned by these lawsuits. Warnings that “as corporations grasp the influence they’ve been granted, they will shift their focus from the weak nations to the strong ones” were dismissed with general mockery.

That warning has come to pass. This year, fossil fuel and extraction companies have initiated a historic level of cases against nations rich and poor, opposing – like the example of the UK mine – government attempts to halt climate breakdown. Corporations have to date won vast sums by using ISDS, of which oil majors have secured eighty-four billion dollars. That equates to the combined GDP