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What is your perceive our system of government functions? Perhaps similar to this. We elect MPs. They vote on bills. If a majority is achieved, the bills pass into law. Legislation are enforced by the courts. End of story. However, that’s how it once functioned. Those days are over.

The Advent of Secret Tribunals

Nowadays, overseas companies, along with the wealthy individuals that control them, are able to litigate against governments for the laws they pass, at offshore tribunals staffed by business advocates. Such disputes are conducted in secret. Differing from national judiciaries, these bodies provide no opportunity to appeal or oversight by judges. You or I cannot take a case to them, nor can our government, including enterprises headquartered in this country. Access is granted only to businesses registered abroad.

If a tribunal determines that a law or policy might diminish the corporation’s projected profits, it can award damages of hundreds of millions of pounds, running into billions.

These awards constitute not real financial harm but funds the panel members determine the company might otherwise have made. The administration could be forced to rescind the measure. It becomes deterred from introducing similar legislation in that area, for fear of facing litigation.

A Mechanism Spiralling Out of Control

Unprecedented levels of disputes are being initiated, as companies take cues from each other, and hedge funds fund legal actions in return for a portion of the takings. The consequence? Sovereignty and popular rule are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the decisions enacted by parliaments is that this provision has been inserted – without public consent, and frequently under an atmosphere of total confidentiality – inside trade treaties.

A Specific Instance: The Cumbrian Coalmine

Last year, activists achieved a major legal triumph at the high court. The judge found that plans to open the first new deep coal mine in the UK for a generation, in Cumbria, were wrongly permitted by the previous government, which had agreed to the extraordinary assertion that the mine could have no impact on national carbon targets. The Labour government then withdrew the licence the former government had issued. Today, this success faces being overturned by an secret arbitration panel accountable to exclusively the companies petitioning it.

Last August, a corporate entity whose ultimate owners reside in the tax haven lodged a claim versus the UK government. Last week a arbitration panel in the US capital was convened to hear it.

This firm is litigating against the UK for the profits it might have made if the mine had been allowed to proceed. Citizens have no clear indication how much this could amount to. Who is acting on its behalf against the UK administration? A sitting MP, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The administration makes a decision, the domestic court validates it, then a overseas corporation disputes it through an secretive arbitration panel, and a elected official acts on its behalf.

A Sanctions Lawsuit

On the same day that the court on the mining lawsuit was convened, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case so far, but it appears probable that he’ll use the ISDS mechanism to fight the penalties the UK imposed on him after the invasion of Ukraine. He has already initiated proceedings against another European state for this reason, claiming sixteen billion dollars: half that state's yearly income. Included in the legal team representing him there? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts believe that the EU’s procrastination in utilising seized oligarchs' funds as security for its loan to Ukraine stems from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This unprecedented, secretive influence over elected governments may be obstructing the funds Ukraine desperately needs.

Empty Promises and Escalating Risks

We were assured that these scenarios were not possible. In 2014, a former prime minister, championing the most significant and hazardous of all such treaties, told us: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” A consultant on this matter described activists of “alarmism … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states had to worry about such legal actions. Warnings that “when companies start to realise the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That threat has come to pass. Recently, energy and resource corporations have filed a record number of claims against nations across the economic spectrum, challenging – similar to the Cumbrian coalmine – government attempts to halt environmental catastrophe. Firms have so far won vast sums through ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP