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Can you understand our political system works? It could be something like this. Citizens choose MPs. They legislate on bills. Should a majority is achieved, the bills become law. The law is maintained by the courts. Simple as that. Well, that used to be how it used to work. Those days are over.

The Rise of Secret Tribunals

In the modern era, foreign corporations, along with the oligarchs that control them, have the power to sue governments for the policies they pass, at offshore tribunals made up of commercial attorneys. The cases are conducted in secret. In contrast to domestic courts, these bodies allow no opportunity to appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even businesses based in this country. They are open only to entities based overseas.

If a tribunal determines that a law or policy might diminish the corporation’s projected profits, it has the power to grant damages of vast sums, even billions.

These sums represent not actual losses but compensation the arbitrators conclude the company would perhaps have made. The government may have to drop the legislation. It will be deterred from passing future laws along the same lines, for fear of incurring a lawsuit.

A Mechanism Growing Exponentially

Record numbers of legal actions are being filed, as companies learn from each other, and investment funds finance suits for a share of a cut of the takings. The result? National sovereignty and popular rule are becoming unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the rulings taken by parliaments is that this provision has been incorporated – absent public approval, and frequently under an atmosphere of total confidentiality – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coalmine

Last year, activists won a great victory at the High Court. The justice ruled that schemes to excavate the first deep coalmine in the UK for 30 years, in northwest England, had been wrongly permitted by the Conservative government, which had accepted the extraordinary assertion that the mine would have had no consequence on our carbon budgets. The Labour government later cancelled the permission the previous administration had granted. Now, this victory could be compromised by an secret arbitration panel accountable to exclusively the entities filing the suit.

In August, a firm whose final controllers are located in the tax haven initiated proceedings versus the UK government. Recently a dispute settlement body in the US capital was convened to hear it.

The claimant is litigating against the UK for the profits it might have made if the mine had been allowed to commence operations. The public has no clear indication how much this sum represents. What legal team is serving as its counsel challenging the UK administration? An elected representative, and ex-law officer in the outgoing administration, the noted patriot the MP. The government passes a law, the national judiciary upholds it, then a overseas corporation contests it through an secretive private court, and a elected official works for its behalf.

An Oligarch's Case

On the same day that the tribunal on the coal mine dispute was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case at present, but it is highly possible that he’ll use the ISDS mechanism to contest the penalties the UK imposed on him subsequent to the Russian aggression. He has previously filed a claim against Luxembourg for this reason, demanding $16bn: an amount representing half government’s yearly budget. Part of the counsel on his side? the wife of a former prime minister, married to the ex-UK leader.

Legal experts contend that the EU’s hesitation in using frozen oligarchs' funds as security for its aid for Ukraine is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations may be obstructing the money Ukraine desperately needs.

Misleading Claims and Growing Risks

The public was told that these events were not possible. In 2014, a former prime minister, promoting the most significant and hazardous of all these agreements, told us: “The UK has signed trade agreement upon trade deal and there has not been a case in the past.” A consultant on this matter accused critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression seemed to be that only poorer nations should be concerned by ISDS claims. Warnings that “once firms grasp the power they now possess, they will turn their attention from the vulnerable countries to the wealthy nations” were dismissed with scepticism.

That prediction has come to pass. Recently, fossil fuel and extraction companies have initiated a historic level of suits against nations rich and poor, opposing – like the example of the UK mine – state efforts to halt climate breakdown. Companies have so far won vast sums by using ISDS, of which energy giants have obtained the majority. That represents the combined GDP