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Can you perceive our political system works? It could be similar to this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. End of story. However, that used to be how it operated in the past. No longer.

The Emergence of Secret Tribunals

Nowadays, foreign corporations, and the wealthy individuals behind them, can sue elected administrations for the policies they pass, at secret arbitration panels staffed by business advocates. These proceedings are held away from public scrutiny. In contrast to domestic courts, these panels provide no avenue for appeal or judicial review. You or I are unable to file a case to them, and neither can our government, or even companies based in this country. They are open solely for businesses operating from foreign soil.

If a tribunal rules that a legislative action could harm the corporation’s projected profits, it has the power to grant damages of vast sums, running into billions.

These awards are based not on real financial harm but funds the arbitrators decide the company might otherwise have made. The government could be forced to abandon its policy. It becomes hesitant to introducing similar legislation of a similar nature, worried about being sued.

A Process Growing Exponentially

Record numbers of disputes are being brought, as corporations learn from each other, and investment funds finance suits for a share of a share of the takings. The consequence? Sovereignty and popular rule are now too costly.

The process is called “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the choices made by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid a climate of total confidentiality – within international trade agreements.

A Real-World Case: The Whitehaven Coalmine

Last year, activists secured a significant win at the senior court. The justice ruled that proposals to open the first new deep coal mine in the UK for three decades, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine would have had zero effect on national carbon targets. The incoming administration subsequently revoked the licence the Tories had issued. Today, this victory could be compromised by an secret arbitration panel reporting to no one but the entities filing the suit.

Last August, a firm whose ultimate owners are located in the tax haven filed a lawsuit versus the UK government. Recently a arbitration panel in the US capital was set up to consider the case.

The company is suing the UK for the revenue it could have earned if the mine had been permitted to commence operations. Citizens have little idea how much this could amount to. What legal team is acting on its behalf in opposition to the state? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot the MP. The state passes a law, the domestic court supports it, then a foreign company challenges it through an unaccountable private court, and a elected official works for its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the coal mine dispute was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. We know little of the case to date, but it is highly possible that he will utilise the tribunal to fight the penalties the UK levied against him after the invasion of Ukraine. He has already started suing Luxembourg with similar intent, demanding sixteen billion dollars: half that nation's annual revenue. Included in the lawyers acting for him in that case? the wife of a former prime minister, wife of the former British prime minister.

International law scholars contend that the EU’s delay in using frozen Russian assets as collateral for its loan to Ukraine is due to apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over democratic administrations may be obstructing the funds Ukraine urgently requires.

Empty Promises and Escalating Costs

The public was told that such things could not occur. In 2014, a government leader, advocating for the most significant and hazardous of all these agreements, stated: “We’ve signed trade agreement after trade deal and we have never seen a case in the past.” A consultant on this matter labelled critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression appeared to be that only poorer nations should be concerned by these lawsuits. Cautionary notes that “once firms grasp the power they’ve been granted, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by scepticism.

That warning has come to pass. This year, oil and gas and resource corporations have filed a historic level of suits against nations both wealthy and developing, challenging – like the example of the Whitehaven project – government attempts to halt global warming. Firms have so far won vast sums by using ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP