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Can you perceive our democratic process operates? Maybe similar to this. We elect MPs. They vote on bills. When a majority is secured, the bills are enacted as law. The law are enforced by the courts. Simple as that. Well, that used to be how it once functioned. No longer.

The Rise of Secret Tribunals

In the modern era, international firms, and the wealthy individuals who own them, have the power to sue elected administrations for the laws they pass, at offshore tribunals made up of corporate lawyers. The cases are conducted behind closed doors. Unlike our courts, these tribunals allow no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, including businesses operating from this country. The door is open solely for corporations based overseas.

Should an arbitration panel rules that a government measure might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

This compensation are based not on actual losses but money the tribunal officials decide the company might otherwise have made. The state might be compelled to abandon its policy. It becomes deterred from passing future laws along the same lines, worried about facing litigation.

A Mechanism Spiralling Out of Control

Historically high figures of legal actions are being filed, as corporations learn from each other, and investment funds finance suits in exchange for a portion of the settlements. The outcome? Sovereignty and popular rule are now too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to override a country's own laws and the decisions made by parliaments is that this clause has been written – without democratic mandate, and frequently under conditions of profound opacity – inside bilateral investment treaties.

A Real-World Case: The Cumbrian Coalmine

Last year, a conservation group achieved a major legal triumph at the senior court. The presiding officer determined that schemes to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were illegally sanctioned by the Conservative government, which had accepted the bizarre claim that the mine would have no consequence on national carbon targets. The new government then withdrew the consent the previous administration had approved. Currently, this legal outcome could be compromised by an offshore tribunal answering to no one but the entities filing the suit.

Last August, a company whose final controllers reside in the tax haven lodged a claim challenging the UK government. The previous week a dispute settlement body in the United States was established to hear it.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to commence operations. The public has no clear indication how much this could amount to. Who is serving as its counsel in opposition to the state? An elected representative, and previous senior legal advisor in the outgoing administration, the noted patriot the MP. The state enacts a policy, the domestic court upholds it, then a international entity disputes it through an unaccountable private court, and a elected official works for its behalf.

An Oligarch's Lawsuit

On the same day that the court on the mining lawsuit was convened, we learned from a government response that the UK is also being sued 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 restrictions the UK imposed on him subsequent to the invasion of Ukraine. He has already filed a claim against another European state for this reason, demanding a colossal sum: an amount representing half nation's yearly budget. Included in the counsel on his side? a prominent lawyer, wife of the ex-UK leader.

Trade specialists contend that the EU’s hesitation in using frozen oligarchs' funds as security for its loan to Ukraine arises from concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, secretive influence over sovereign states may be obstructing the money Ukraine desperately needs.

Misleading Claims and Escalating Costs

Politicians promised that these events could not occur. In 2014, a former prime minister, championing the biggest and most dangerous of all investment pacts, told us: “Britain has agreed to trade agreement upon trade deal and there has not been a problem in the past.” An expert on this issue accused campaigners of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries should be concerned by such legal actions. Predictions that “when companies grasp the power bestowed upon them, they will turn their attention from the poorer states to the strong ones” were greeted by widespread derision.

That threat has come to pass. In the current period, fossil fuel and mining firms have filed a unprecedented number of cases against nations across the economic spectrum, contesting – similar to the Cumbrian coalmine – government attempts to stop global warming. Companies have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP