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Can you understand our political system operates? It could be along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills are enacted as law. Legislation are enforced by the courts. End of story. However, that used to be how it used to work. No longer.

The Advent of Secret Tribunals

In the modern era, overseas companies, or the wealthy individuals behind them, can sue elected administrations for the regulations they pass, at private courts composed of corporate lawyers. The cases are conducted behind closed doors. Unlike our courts, these bodies allow no avenue for appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, or even companies operating from this country. They are open only to businesses based overseas.

If a tribunal finds that a law or policy could harm the corporation’s anticipated profits, it may order damages of vast sums, running into billions.

This compensation constitute not real financial harm but funds the arbitrators decide the company would perhaps have made. The administration may have to abandon its policy. It becomes deterred from enacting future policies in that area, due to the risk of facing litigation.

A System Growing Exponentially

Unprecedented levels of cases are being brought, as firms observe each other, and hedge funds finance suits for a share of a portion of the awards. The result? Democratic sovereignty and democratic governance are becoming prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede domestic law and the choices made by legislatures is that this provision has been inserted – absent public approval, and frequently under a climate of total confidentiality – into trade treaties.

A Specific Instance: The Whitehaven Coal Mine

A year ago, a conservation group won a great victory at the high court. The justice determined that proposals to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had accepted the bizarre claim that the mine would have zero effect on our carbon budgets. The new government subsequently revoked the permission the Tories had issued. Currently, this success faces being overturned by an secret arbitration panel answering to exclusively the entities bringing the case.

Last August, a company whose beneficial owners reside in the offshore financial centre filed a lawsuit challenging the UK government. The previous week a dispute settlement body in the US capital was set up to hear it.

The claimant is litigating against the UK for the revenue it would have generated if the mine had been permitted to go ahead. We have little idea how much this sum represents. What legal team is representing it against the UK administration? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the domestic court supports it, then a international entity contests it through an unaccountable offshore tribunal, and a elected official represents its behalf.

An Oligarch's Case

Simultaneously that the court on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are scarce of the case at present, but it appears probable that he may employ the tribunal to challenge the restrictions the UK enacted against him subsequent to the invasion of Ukraine. He has already initiated proceedings against a small nation on these grounds, claiming sixteen billion dollars: equivalent to half of government’s yearly income. Included in the counsel representing him there? a prominent lawyer, spouse of the previous PM.

Legal experts argue that the EU’s delay in utilising seized state funds as guarantee for its aid for 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 unprecedented, undemocratic power over elected governments may be obstructing the finance Ukraine critically depends on.

Empty Promises and Escalating Threats

The public was told that such things were not possible. In 2014, a government leader, championing the most significant and hazardous of all investment pacts, declared: “We’ve signed investment treaty upon trade deal and there has never been a case in the past.” A consultant on this topic accused critics of “exaggeration … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that exclusively weaker states needed to fear such legal actions. Predictions that “when companies start to realise the authority they’ve been granted, they will shift their focus from the vulnerable countries to the developed economies” were met with widespread derision.

That prediction is now a reality. In the current period, energy and extraction companies have initiated a historic level of claims against nations rich and poor, opposing – as in the case of the Whitehaven project – state efforts to halt environmental catastrophe. Corporations have thus far won vast sums via ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That represents the combined GDP