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Can you reckon our political system works? Perhaps similar to this. Citizens choose MPs. They vote on bills. If a majority is achieved, the bills pass into law. Statutes are enforced by the courts. That's it. Yet, that used to be how it once functioned. Not anymore.

The Rise of Secret Tribunals

In the modern era, foreign corporations, along with the oligarchs who own them, are able to litigate against nation states for the policies they pass, at secret arbitration panels made up of commercial attorneys. The cases are conducted behind closed doors. Unlike our courts, these tribunals grant no right of appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, including businesses operating from this country. They are open solely for entities operating from foreign soil.

When a secret court determines that a law or policy may compromise the corporation’s expected profits, it can award compensation of hundreds of millions of pounds, running into billions.

These awards constitute not tangible damages but money the arbitrators decide the company would perhaps have made. The government might be compelled to abandon its policy. It is deterred from passing future laws along the same lines, worried about facing litigation.

A System Running Rampant

Historically high figures of disputes are being filed, as corporations take cues from each other, and private equity finance suits in return for a cut of the takings. The consequence? Sovereignty and democracy are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The reason it is allowed to trump domestic law and the rulings made by elected bodies is that this clause has been incorporated – without public consent, and often in conditions of profound opacity – inside bilateral investment treaties.

A Real-World Instance: The UK Coalmine

A year ago, activists secured a significant win at the High Court. The presiding officer ruled that schemes to excavate the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the Conservative government, which had accepted the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration later cancelled the permission the previous administration had issued. Now, this victory faces being overturned by an foreign court answering to no one but the corporations petitioning it.

Last August, a corporate entity whose ultimate owners are based in the Cayman Islands lodged a claim challenging the UK government. Last week a arbitration panel in the United States was convened to adjudicate on it.

The claimant is suing the UK for the profits it would have generated if the mine had received permission to proceed. We have no idea how much this could amount to. Which individual is representing it in opposition to the state? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The administration makes a decision, the national judiciary validates it, then a overseas corporation disputes it through an undemocratic arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Challenge

On the same day that the panel on the coal mine dispute was appointed, it was revealed from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. Details are nothing of the case to date, but it is highly possible that he’ll use the arbitration process to fight the sanctions the UK levied against him following the Russian aggression. He has previously started suing another European state for this reason, seeking a colossal sum: an amount representing half state's yearly income. Part of the counsel acting for him in that case? a prominent lawyer, wife of the former British prime minister.

Trade specialists contend that the EU’s procrastination in utilising seized Russian assets as collateral for its loan to Ukraine arises from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over sovereign states may be obstructing the money Ukraine urgently requires.

False Assurances and Mounting Threats

Politicians promised that such things were not possible. In 2014, a former prime minister, championing the most significant and hazardous of all such treaties, stated: “We’ve signed investment treaty upon trade deal and there has never been a issue in the past.” An adviser on this issue described activists of “scaremongering … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states should be concerned by ISDS claims. Predictions that “when companies begin to understand the influence bestowed upon them, they will redirect their efforts from the weak nations to the wealthy nations” were met with general mockery.

That prediction has come to pass. In the current period, oil and gas and extraction companies have filed a record number of claims against nations rich and poor, challenging – like the example of the Whitehaven project – government attempts to stop environmental catastrophe. Firms have so far won $114bn through ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP