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What is your reckon our political system works? It could be along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills pass into law. The law is maintained by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Rise of Secret Tribunals

Today, foreign corporations, or the wealthy individuals that control them, can sue governments for the laws they pass, at secret arbitration panels made up of business advocates. The cases are held away from public scrutiny. Differing from national judiciaries, these tribunals provide no avenue for appeal or judicial review. You or I cannot take a case to them, nor can our government, or even enterprises based in this country. Access is granted solely for corporations based overseas.

Should an arbitration panel determines that a government measure could harm the corporation’s projected profits, it can award compensation of vast sums, potentially billions.

These awards constitute not tangible damages but compensation the panel members conclude the company could potentially have made. The administration could be forced to abandon its policy. It is deterred from passing future laws of a similar nature, for fear of facing litigation.

A System Growing Exponentially

Historically high figures of legal actions are being filed, as corporations observe each other, and private equity fund legal actions for a share of a portion of the settlements. The consequence? Sovereignty and popular rule are now prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump a country's own laws and the decisions taken by elected bodies is that this provision has been incorporated – absent public approval, and frequently under conditions of total confidentiality – within international trade agreements.

A Concrete Example: The Whitehaven Coal Mine

Last year, environmental campaigners won a great victory at the high court. The judge determined that schemes to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the bizarre claim that the mine could have no impact on national carbon targets. The Labour government subsequently revoked the consent the former government had granted. Currently, this success faces being overturned by an offshore tribunal answering to only the entities bringing the case.

Last August, a company whose ultimate owners are located in the Cayman Islands initiated proceedings challenging the UK government. Recently a tribunal in the United States was set up to hear it.

The claimant is seeking compensation from the UK for the money it might have made if the mine had been permitted to go ahead. The public has no idea how much this could amount to. What legal team is representing it against the UK administration? A sitting MP, and former attorney-general in the previous government, that great patriot Sir Geoffrey Cox. The government passes a law, the domestic court upholds it, then a foreign company contests it through an unaccountable private court, and a elected official works for its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the mining lawsuit was convened, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are little of the case to date, but it is highly possible that he’ll use the arbitration process to challenge the sanctions the UK enacted against him after the Russian aggression. He has previously started suing a small nation on these grounds, claiming a colossal sum: half that nation's yearly budget. Included in the lawyers representing him there? a prominent lawyer, wife of the ex-UK leader.

Trade specialists argue that the EU’s hesitation in leveraging immobilised state funds as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be sued in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over democratic administrations could be blocking the finance Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that these events could not occur. Previously, a former prime minister, championing the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to trade agreement after trade deal and there has not been a issue in the past.” An adviser on this matter described critics of “alarmism … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “as corporations start to realise the power they’ve been granted, they will turn their attention from the poorer states to the strong ones” were met with scepticism.

That prediction has come to pass. In the current period, energy and extraction companies have initiated a historic level of suits against nations rich and poor, opposing – like the example of the Cumbrian coalmine – government attempts to stop climate breakdown. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP