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What is your reckon our political system works? Maybe similar to this. The public votes for MPs. They legislate on bills. Should a majority is achieved, the bills pass into law. Statutes is maintained by the courts. That's it. Yet, that used to be how it operated in the past. No longer.

The Advent of Secret Tribunals

In the modern era, foreign corporations, along with the oligarchs that control them, have the power to sue governments for the policies they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings are conducted behind closed doors. Unlike our courts, these panels grant no opportunity to appeal or legal review. You or I cannot take a case to them, nor can our government, including businesses based in this country. Access is granted exclusively to businesses based overseas.

Should an arbitration panel finds that a legislative action may compromise the corporation’s expected profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

This compensation constitute not tangible damages but funds the tribunal officials decide the company could potentially have made. The administration might be compelled to rescind the measure. It is discouraged from passing future laws of a similar nature, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of disputes are being brought, as companies take cues from each other, and investment funds fund legal actions in return for a share of the takings. The outcome? Sovereignty and popular rule are turning into prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the rulings enacted by elected bodies is that this stipulation has been written – without democratic mandate, and frequently under conditions of profound opacity – inside trade treaties.

A Real-World Example: The Cumbrian Coal Mine

A year ago, a conservation group achieved a major legal triumph at the High Court. The justice ruled that schemes to excavate the first new deep coal mine in the UK for 30 years, in northwest England, had been unlawfully approved by the previous government, which had endorsed the questionable argument that the mine would have had no consequence on our carbon budgets. The incoming administration later cancelled the licence the former government had issued. Currently, this victory is under threat by an secret arbitration panel accountable to only the entities bringing the case.

Last August, a corporate entity whose final controllers reside in the Cayman Islands lodged a claim challenging the UK government. Last week a dispute settlement body in Washington DC was established to adjudicate on it.

The company is suing the UK for the revenue it would have generated if the mine had received permission to proceed. The public has no clear indication how much this might be. What legal team is serving as its counsel in opposition to the British government? A member of parliament, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The government enacts a policy, the domestic court upholds it, then a overseas corporation contests it through an unaccountable private court, and a member of our parliament represents its behalf.

The Russian Challenge

On the same day that the panel on the coalmine case was appointed, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows nothing of the case so far, but it is highly possible that he’ll use the tribunal to fight the penalties the UK enacted against him after the invasion of Ukraine. He has already initiated proceedings against a small nation on these grounds, claiming $16bn: equivalent to half of nation's yearly income. Part of the lawyers acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Trade specialists argue that the EU’s hesitation in using frozen state funds as guarantee for its financial support package stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over sovereign states could be blocking the funds Ukraine desperately needs.

Empty Promises and Mounting Threats

We were assured that such things wouldn’t happen. Years ago, a government leader, advocating for the biggest and most dangerous of all such treaties, told us: “The UK has signed trade deal after trade deal and there has never been a problem in the past.” An adviser on this issue accused critics of “exaggeration … the fact is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that exclusively weaker states should be concerned by these lawsuits. Predictions that “once firms grasp the influence they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were dismissed with scepticism.

That threat is now a reality. Recently, oil and gas and mining firms have initiated a record number of suits against nations rich and poor, opposing – similar to the Cumbrian coalmine – government attempts to prevent global warming. Corporations have to date won $114bn via ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP