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What is your understand our system of government operates? Maybe similar to this. The public votes for MPs. They legislate on bills. When a majority is obtained, the bills become law. The law are enforced by the courts. End of story. Well, that used to be how it used to work. Those days are over.

The Advent of Secret Tribunals

In the modern era, international firms, along with the oligarchs behind them, are able to litigate against elected administrations for the policies they pass, at secret arbitration panels composed of commercial attorneys. The cases are held away from public scrutiny. Differing from national judiciaries, these bodies grant no avenue for appeal or oversight by judges. The general public cannot take a case to them, nor can our government, or even enterprises headquartered in this country. The door is open only to corporations based overseas.

When a secret court determines that a legislative action might diminish the corporation’s projected profits, it may order financial penalties of hundreds of millions of pounds, running into billions.

These awards constitute not tangible damages but compensation the tribunal officials determine the company might otherwise have made. The state might be compelled to abandon its policy. It will be discouraged from passing future laws of a similar nature, due to the risk of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being filed, as corporations take cues from each other, and investment funds fund legal actions in exchange for a share of the takings. The result? Sovereignty and popular rule are turning into unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the decisions made by legislatures is that this stipulation has been inserted – without public consent, and typically amid an atmosphere of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the senior court. The judge found that proposals to excavate the first major 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 could have zero effect on national carbon targets. The Labour government subsequently revoked the permission the Tories had issued. Currently, this victory faces being overturned by an offshore tribunal accountable to only the corporations filing the suit.

During August, a corporate entity whose beneficial owners are located in the offshore financial centre initiated proceedings challenging the UK government. Recently a tribunal in the US capital was set up to adjudicate on it.

The claimant is litigating against the UK for the money it could have earned if the mine had received permission to proceed. We have no idea how much this might be. What legal team is representing it against the UK administration? A sitting MP, and former attorney-general in the previous government, that great patriot the MP. The government makes a decision, the national judiciary supports it, then a international entity disputes it through an secretive private court, and a sitting MP works for its behalf.

An Oligarch's Lawsuit

On the same day that the tribunal on the coalmine case was appointed, information emerged from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows scarce of the case so far, but it seems likely that he’ll use the ISDS mechanism to fight the sanctions the UK imposed on him following the war in Ukraine. He has initiated proceedings against another European state on these grounds, seeking sixteen billion dollars: equivalent to half of state's annual revenue. Among the lawyers on his side? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts argue that the EU’s procrastination in using frozen state funds as collateral for its aid for Ukraine arises from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over elected governments may be obstructing the funds Ukraine urgently requires.

Empty Promises and Escalating Risks

We were assured that such things were not possible. Years ago, a former prime minister, championing the biggest and most dangerous of all investment pacts, told us: “We’ve signed investment treaty upon trade deal and there has not been a issue in the past.” A consultant on this topic described critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states had to worry about ISDS claims. Cautionary notes that “as corporations start to realise the authority they’ve been granted, they will turn their attention from the vulnerable countries to the developed economies” were greeted by general mockery.

That warning is now a reality. Recently, energy and resource corporations have lodged a historic level of suits against nations across the economic spectrum, contesting – similar to the UK mine – government attempts to halt global warming. Companies have thus far won $114bn by using ISDS, of which energy giants have secured the majority. That equates to the combined GDP