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What is your understand our political system works? It could be similar to this. We elect MPs. They vote on bills. If a majority is obtained, the bills become law. Statutes are enforced by the courts. That's it. Well, that’s how it used to work. Not anymore.

The Emergence of Secret Tribunals

Today, foreign corporations, or the wealthy individuals behind them, are able to litigate against governments for the policies they pass, at offshore tribunals composed of business advocates. Such disputes are held away from public scrutiny. Differing from national judiciaries, these bodies grant no avenue for appeal or judicial review. You or I are unable to file a case to them, just as our government, or even companies based in this country. They are open exclusively to businesses operating from foreign soil.

If a tribunal determines that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, running into billions.

These sums are based not on actual losses but money the panel members conclude the company could potentially have made. The administration might be compelled to rescind the measure. It becomes discouraged from enacting future policies of a similar nature, for fear of being sued.

A Mechanism Spiralling Out of Control

Record numbers of disputes are being filed, as companies take cues from each other, and investment funds finance suits for a share of a portion of the takings. The outcome? Democratic sovereignty and popular rule are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede domestic law and the rulings taken by elected bodies is that this clause has been inserted – without public consent, and often in conditions of profound opacity – into international trade agreements.

A Real-World Example: The Cumbrian Coalmine

Twelve months ago, activists achieved a major legal triumph at the high court. The justice determined that plans to excavate the first new deep coal mine in the UK for 30 years, in northwest England, had been illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine could have no consequence on climate commitments. The new government later cancelled the licence the previous administration had approved. Today, this legal outcome is under threat by an offshore tribunal answering to only the companies filing the suit.

In August, a corporate entity whose final controllers are located in the tax haven filed a lawsuit against the UK government. The previous week a arbitration panel in the US capital was convened to consider the case.

The company is seeking compensation from the UK for the money it would have generated if the mine had been allowed to go ahead. We have no idea how much this might be. What legal team is representing it challenging the British government? A member of parliament, and former attorney-general in the previous government, that great patriot the MP. The government passes a law, the domestic court supports it, then a overseas corporation disputes it through an undemocratic private court, and a sitting MP acts on its behalf.

A Sanctions Case

Concurrently that the court on the mining lawsuit was established, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know little of the case at present, but it is highly possible that he may employ the ISDS mechanism to challenge the restrictions the UK enacted against him subsequent to the Russian aggression. He has started suing another European state for this reason, demanding a colossal sum: equivalent to half of government’s yearly income. Part of the legal team on his side? a prominent lawyer, wife of the previous PM.

Legal experts argue that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its financial support package stems from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, unaccountable authority over democratic administrations could be blocking the money Ukraine critically depends on.

False Assurances and Escalating Threats

The public was told that these events were not possible. Previously, a senior politician, promoting the largest and riskiest of all these agreements, told us: “The UK has signed investment treaty after trade deal and there has not been a problem in the past.” An expert on this issue labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “once firms grasp the authority bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were met with scepticism.

That warning has now materialised. This year, energy and resource corporations have filed a record number of claims against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – official measures to halt climate breakdown. Corporations have to date won one hundred and fourteen billion dollars via ISDS, of which oil majors have been awarded $84bn. That represents the combined GDP