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What is your perceive our system of government functions? It could be similar to this. Citizens choose MPs. They vote on bills. When a majority is achieved, the bills become law. Statutes is upheld by the courts. That's it. Well, that was how it operated in the past. No longer.

The Emergence of Secret Tribunals

Today, overseas companies, and the oligarchs that control them, can sue governments for the policies they pass, at private courts made up of business advocates. Such disputes are conducted away from public scrutiny. Differing from national judiciaries, these tribunals grant no right of appeal or oversight by judges. You or I are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. Access is granted only to businesses based overseas.

Should an arbitration panel rules that a law or policy may compromise the corporation’s expected profits, it can award compensation of hundreds of millions of pounds, even billions.

These awards represent not tangible damages but money the arbitrators decide the company could potentially have made. The state might be compelled to drop the legislation. It is hesitant to introducing similar legislation of a similar nature, due to the risk of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of cases are being initiated, as companies observe each other, and investment funds bankroll lawsuits in return for a portion of the settlements. The outcome? Sovereignty and popular rule are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump national legislation and the decisions enacted by legislatures is that this clause has been incorporated – without democratic mandate, and typically amid a climate of total confidentiality – into bilateral investment treaties.

A Concrete Case: The UK Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the high court. The presiding officer ruled that schemes to open the first deep coalmine in the UK for a generation, in Cumbria, were wrongly permitted by the previous government, which had agreed to the questionable argument that the mine could have zero effect on climate commitments. The incoming administration then withdrew the consent the former government had granted. Currently, this victory could be compromised by an offshore tribunal accountable to exclusively the companies bringing the case.

During August, a firm whose ultimate owners are located in the offshore financial centre lodged a claim against the UK government. Recently a tribunal in Washington DC was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to go ahead. We have little idea how much this could amount to. Who is representing it challenging the British government? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government passes a law, the national judiciary validates it, then a international entity contests it through an undemocratic private court, and a elected official acts on its behalf.

A Sanctions Challenge

On the same day that the panel on the coalmine case was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. Details are scarce of the case to date, but it appears probable that he’ll use the ISDS mechanism to fight the sanctions the UK levied against him following the war in Ukraine. He has already filed a claim against a small nation for this reason, demanding a colossal sum: an amount representing half state's yearly budget. Included in the counsel representing him there? the wife of a former prime minister, married to the ex-UK leader.

Legal experts believe that the EU’s delay in utilising seized state funds as collateral for its aid for Ukraine is due to Belgium’s fear that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states may be obstructing the finance Ukraine urgently requires.

Misleading Claims and Growing Costs

Politicians promised that such things could not occur. Previously, a former prime minister, championing the biggest and most dangerous of all these agreements, declared: “Britain has agreed to trade deal after trade deal and we have never seen a case in the past.” An expert on this matter accused critics of “exaggeration … 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 “as corporations start to realise the influence bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with widespread derision.

That prediction is now a reality. This year, oil and gas and extraction companies have initiated a unprecedented number of suits against nations rich and poor, challenging – like the example of the Cumbrian coalmine – government attempts to stop climate breakdown. Firms have thus far won vast sums by using ISDS, of which energy giants have secured the majority. That equates to the combined GDP