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What is your perceive our system of government works? It could be something like this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills become law. Legislation is maintained by the courts. That's it. Well, that’s how it operated in the past. Those days are over.

The Rise of Secret Tribunals

In the modern era, overseas companies, along with the wealthy individuals who own them, are able to litigate against elected administrations for the policies they pass, at private courts staffed by commercial attorneys. These proceedings are conducted behind closed doors. Differing from national judiciaries, these tribunals grant no right of appeal or judicial review. You or I cannot take a case to them, nor can our government, or even companies headquartered in this country. Access is granted exclusively to businesses based overseas.

If a tribunal determines that a government measure might diminish the corporation’s projected profits, it has the power to grant compensation of vast sums, potentially billions.

These awards constitute not actual losses but funds the panel members determine the company would perhaps have made. The administration could be forced to abandon its policy. It becomes deterred from enacting future policies of a similar nature, for fear of incurring a lawsuit.

A Process Running Rampant

Record numbers of legal actions are being brought, as corporations take cues from each other, and private equity bankroll lawsuits in return for a portion of the takings. The consequence? Democratic sovereignty and democratic governance are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The explanation it can supersede domestic law and the decisions made by legislatures is that this clause has been incorporated – absent public approval, and frequently under conditions of total confidentiality – into trade treaties.

A Real-World Case: The UK Coalmine

Last year, activists secured a significant win at the high court. The judge determined that proposals to excavate the first deep coalmine in the UK for 30 years, in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had zero effect on national carbon targets. The Labour government subsequently revoked the consent the previous administration had approved. Currently, this legal outcome faces being overturned by an foreign court accountable to exclusively the entities petitioning it.

Last August, a corporate entity whose ultimate owners are located in the Cayman Islands filed a lawsuit versus the UK government. Last week a tribunal in Washington DC was set up to adjudicate on it.

The company is seeking compensation from the UK for the revenue it would have generated if the mine had been allowed to commence operations. We have no idea how much this might be. Which individual is serving as its counsel against the state? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The state enacts a policy, the high court upholds it, then a overseas corporation challenges it through an undemocratic arbitration panel, and a elected official represents its behalf.

An Oligarch's Case

Simultaneously that the court on the coal mine dispute was established, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows little of the case to date, but it appears probable that he will utilise the tribunal to fight the penalties the UK levied against him after the Russian aggression. He has previously initiated proceedings against Luxembourg with similar intent, seeking sixteen billion dollars: equivalent to half of nation's yearly budget. Part of the lawyers representing him there? the wife of a former prime minister, wife of the former British prime minister.

Legal experts believe that the EU’s delay in using frozen state funds as security for its financial support package stems from apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments might be preventing the funds Ukraine desperately needs.

Misleading Claims and Mounting Threats

Politicians promised that these events could not occur. Previously, a former prime minister, advocating for the largest and riskiest of all investment pacts, declared: “Britain has agreed to trade agreement after trade deal and there has never been a problem in the past.” A consultant on this issue described campaigners of “alarmism … the fact is, ISDS barely touches the UK much”. The overall message appeared to be that solely developing countries needed to fear such legal actions. Warnings that “as corporations begin to understand the authority they’ve been granted, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by general mockery.

That prediction has now materialised. This year, oil and gas and resource corporations have lodged a historic level of cases against nations across the economic spectrum, contesting – similar to the Whitehaven project – government attempts to halt global warming. Corporations have so far won $114bn through ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP