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Can you understand our political system operates? It could be similar to this. Citizens choose MPs. They legislate on bills. When a majority is secured, the bills pass into law. The law is upheld by the courts. Simple as that. Well, that was how it used to work. No longer.

The Emergence of Secret Tribunals

Nowadays, international firms, along with the oligarchs that control them, can sue elected administrations for the regulations they pass, at private courts composed of business advocates. These proceedings take place in secret. In contrast to domestic courts, these tribunals allow no avenue for appeal or legal review. The general public cannot take a case to them, and neither can our government, or even enterprises operating from this country. The door is open solely for corporations based overseas.

When a secret court determines that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant financial penalties of vast sums, even billions.

These awards represent not actual losses but money the tribunal officials conclude the company would perhaps have made. The government might be compelled to abandon its policy. It will be deterred from enacting future policies of a similar nature, for fear of being sued.

A System Growing Exponentially

Historically high figures of cases are being brought, as companies learn from each other, and private equity bankroll lawsuits in return for a portion of the settlements. The result? National sovereignty and popular rule are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the decisions enacted by elected bodies is that this stipulation has been incorporated – without public consent, and typically amid an atmosphere of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Cumbrian Coal Mine

Twelve months ago, activists won a great victory at the high court. The justice ruled that schemes to dig the first major coal mine in the UK for 30 years, in northwest England, were unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine would have zero effect on climate commitments. The Labour government subsequently revoked the licence the Tories had approved. Today, this success is under threat by an offshore tribunal reporting to no one but the entities petitioning it.

Last August, a corporate entity whose beneficial owners are located in the tax haven initiated proceedings against the UK government. Recently a dispute settlement body in Washington DC was set up to adjudicate on it.

The claimant is suing the UK for the profits it might have made if the mine had been permitted to go ahead. We have no idea how much this could amount to. Who is acting on its behalf challenging the UK administration? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The government passes a law, the high court supports it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a elected official works for its behalf.

The Russian Challenge

Concurrently that the tribunal on the mining lawsuit was convened, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. Details are nothing of the case at present, but it is highly possible that he will utilise the arbitration process to challenge the penalties the UK imposed on him subsequent to the war in Ukraine. He has already filed a claim against a small nation on these grounds, claiming a colossal sum: half that state's annual revenue. Included in the lawyers representing him there? a prominent lawyer, married to the former British prime minister.

Trade specialists contend that the EU’s delay in utilising seized oligarchs' funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments could be blocking the funds Ukraine desperately needs.

Empty Promises and Escalating Risks

We were assured that these events were not possible. Previously, a government leader, championing the most significant and hazardous of all these agreements, declared: “Britain has agreed to trade deal after trade deal and there has never been a case in the past.” A consultant on this issue labelled activists of “alarmism … in reality, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries should be concerned by ISDS claims. Warnings that “when companies begin to understand the influence bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were met with general mockery.

That threat has now materialised. In the current period, oil and gas and resource corporations have initiated a unprecedented number of claims against nations both wealthy and developing, challenging – similar to the Cumbrian coalmine – official measures to stop environmental catastrophe. Companies have thus far won one hundred and fourteen billion dollars through ISDS, of which oil majors have secured eighty-four billion dollars. That equates to the combined GDP