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Can you reckon our system of government operates? It could be similar to this. We elect MPs. They legislate on bills. Should a majority is obtained, the bills become law. Statutes is maintained by the courts. End of story. Well, that’s how it used to work. No longer.

The Emergence of Secret Tribunals

Nowadays, foreign corporations, along with the oligarchs that control them, have the power to sue elected administrations for the laws they pass, at offshore tribunals composed of corporate lawyers. Such disputes are held behind closed doors. Differing from national judiciaries, these tribunals grant no opportunity to appeal or legal review. You or I are barred from bringing a case to them, just as our government, or even businesses headquartered in this country. They are open exclusively to businesses based overseas.

When a secret court finds that a legislative action could harm the corporation’s projected profits, it has the power to grant financial penalties of vast sums, running into billions.

This compensation constitute not actual losses but funds the tribunal officials determine the company would perhaps have made. The administration could be forced to abandon its policy. It becomes deterred from introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A Process Spiralling Out of Control

Record numbers of disputes are being brought, as corporations learn from each other, and hedge funds finance suits in exchange for a portion of the takings. The consequence? Democratic sovereignty and democracy are becoming unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the decisions made by elected bodies is that this provision has been incorporated – without democratic mandate, and frequently under an atmosphere of extreme secrecy – into international trade agreements.

A Concrete Case: The Cumbrian Coal Mine

Last year, a conservation group won a great victory at the high court. The justice ruled that proposals to open the first new deep coal mine in the UK for 30 years, in Cumbria, were found to be wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have had no consequence on climate commitments. The incoming administration later cancelled the licence the Tories had issued. Currently, this victory could be compromised by an foreign court reporting to only the entities filing the suit.

Last August, a corporate entity whose beneficial owners reside in the tax haven initiated proceedings challenging the UK government. The previous week a tribunal in the US capital was convened to adjudicate on it.

This firm is suing the UK for the revenue it could have earned if the mine had been permitted to proceed. Citizens have no clear indication how much this could amount to. What legal team is acting on its behalf challenging the British government? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot the MP. The state makes a decision, the high court validates it, then a foreign company disputes it through an secretive arbitration panel, and a member of our parliament represents its behalf.

The Russian Case

Simultaneously that the tribunal on the coalmine case was appointed, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know nothing of the case to date, but it appears probable that he may employ the arbitration process to fight the sanctions the UK levied against him following the invasion of Ukraine. He has started suing another European state with similar intent, seeking sixteen billion dollars: half that government’s yearly income. Included in the lawyers on his side? a prominent lawyer, married to the ex-UK leader.

Legal experts believe that the EU’s procrastination in leveraging immobilised state funds as security for its financial support package arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over elected governments may be obstructing the funds Ukraine desperately needs.

Empty Promises and Mounting Risks

We were assured that these events wouldn’t happen. In 2014, a senior politician, championing the biggest and most dangerous of all such treaties, told us: “We’ve signed investment treaty after trade deal and we have never seen a issue in the past.” An expert on this matter described activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “as corporations grasp the influence bestowed upon them, they will turn their attention from the weak nations to the developed economies” were greeted by general mockery.

That warning has now materialised. This year, fossil fuel and extraction companies have initiated a unprecedented number of claims against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – state efforts to halt global warming. Firms have so far won $114bn via ISDS, of which oil majors have been awarded the majority. That is equivalent to the combined GDP