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Can you understand our system of government operates? Perhaps similar to this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills become law. The law are enforced by the courts. Simple as that. However, that was how it used to work. Not anymore.

The Advent of Secret Tribunals

In the modern era, international firms, along with the billionaires behind them, are able to litigate against nation states for the laws they pass, at offshore tribunals composed of commercial attorneys. These proceedings take place in secret. In contrast to domestic courts, these tribunals provide no right of appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even enterprises operating from this country. Access is granted only to businesses registered abroad.

When a secret court finds that a government measure may compromise the corporation’s projected profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums constitute not real financial harm but funds the arbitrators decide the company could potentially have made. The state may have to drop the legislation. It will be discouraged from passing future laws along the same lines, due to the risk of incurring a lawsuit.

A System Growing Exponentially

Record numbers of cases are being brought, as firms take cues from each other, and hedge funds fund legal actions in return for a share of the takings. The result? Democratic sovereignty and democratic governance are now too costly.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the decisions enacted by elected bodies is that this provision has been written – absent public approval, and frequently under a climate of total confidentiality – inside trade treaties.

A Concrete Example: The Cumbrian Coal Mine

A year ago, a conservation group secured a significant win at the senior court. The presiding officer found that proposals to excavate the first major coal mine in the UK for 30 years, in Cumbria, had been illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine would have had zero effect on our carbon budgets. The new government subsequently revoked the consent the previous administration had issued. Now, this victory could be compromised by an offshore tribunal reporting to no one but the corporations filing the suit.

In August, a corporate entity whose ultimate owners are based in the tax haven initiated proceedings versus the UK government. Recently a tribunal in Washington DC was set up to hear it.

The claimant is litigating against the UK for the profits it would have generated if the mine had been allowed to commence operations. The public has little idea how much this could amount to. Which individual is representing it challenging the state? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the high court upholds it, then a international entity contests it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

The Russian Lawsuit

Concurrently that the court on the coal mine dispute was convened, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case at present, but it is highly possible that he may employ the arbitration process to challenge the restrictions the UK enacted against him following the Russian aggression. He has already initiated proceedings against Luxembourg with similar intent, seeking $16bn: half that state's yearly income. Included in the legal team representing him there? the wife of a former prime minister, spouse of the former British prime minister.

International law scholars believe that the EU’s delay in leveraging immobilised oligarchs' funds as security for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations could be blocking the money Ukraine desperately needs.

Misleading Claims and Escalating Risks

The public was told that these events could not occur. In 2014, a former prime minister, advocating for the most significant and hazardous of all these agreements, declared: “The UK has signed investment treaty after trade deal and there has never been a case in the past.” A consultant on this matter accused campaigners of “exaggeration … the truth is, ISDS barely touches the UK much”. The general impression appeared to be that exclusively weaker states had to worry about such legal actions. Warnings that “once firms start to realise the power bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were met with scepticism.

That warning is now a reality. In the current period, energy and extraction companies have filed a unprecedented number of cases against nations both wealthy and developing, challenging – as in the case of the UK mine – official measures to prevent climate breakdown. Firms have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured $84bn. That equates to the combined GDP