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Can you perceive our political system works? It could be along the lines of this. We elect MPs. They vote on bills. If a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. However, that used to be how it used to work. Not anymore.

The Rise of Secret Tribunals

Today, international firms, along with the oligarchs that control them, are able to litigate against nation states for the regulations they pass, at secret arbitration panels staffed by business advocates. Such disputes are held in secret. In contrast to domestic courts, these panels provide no opportunity to appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises operating from this country. They are open exclusively to corporations based overseas.

When a secret court rules that a law or policy could harm the corporation’s anticipated profits, it can award damages of hundreds of millions of pounds, even billions.

These sums constitute not actual losses but money the panel members determine the company would perhaps have made. The state may have to rescind the measure. It becomes hesitant to enacting future policies of a similar nature, due to the risk of being sued.

A System Growing Exponentially

Record numbers of disputes are being initiated, as firms learn from each other, and private equity fund legal actions in return for a portion of the settlements. The consequence? National sovereignty and democracy are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the decisions made by legislatures is that this provision has been inserted – without democratic mandate, and frequently under conditions of extreme secrecy – within bilateral investment treaties.

A Specific Example: The Cumbrian Coal Mine

A year ago, environmental campaigners won a great victory at the high court. The presiding officer ruled that schemes to dig the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had endorsed the questionable argument that the mine could have zero effect on climate commitments. The new government later cancelled the permission the Tories had granted. Currently, this victory could be compromised by an foreign court accountable to only the companies petitioning it.

During August, a corporate entity whose final controllers reside in the tax haven filed a lawsuit challenging the UK government. The previous week a arbitration panel in the United States was set up to hear it.

The company is suing the UK for the profits it might have made if the mine had been permitted to commence operations. The public has no idea how much this might be. Which individual is acting on its behalf in opposition to the UK administration? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot the MP. The state makes a decision, the domestic court upholds it, then a international entity challenges it through an secretive private court, and a sitting MP acts on its behalf.

The Russian Lawsuit

On the same day that the tribunal on the coalmine case was appointed, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know little of the case to date, but it is highly possible that he’ll use the tribunal to challenge the restrictions the UK levied against him following the invasion of Ukraine. He has initiated proceedings against another European state with similar intent, claiming $16bn: equivalent to half of nation's yearly budget. Among the legal team on his side? Cherie Blair, married to the ex-UK leader.

International law scholars contend that the EU’s hesitation in utilising seized oligarchs' funds as guarantee for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a trade agreement. This unprecedented, undemocratic power over sovereign states might be preventing the funds Ukraine urgently requires.

Empty Promises and Mounting Threats

We were assured that such things could not occur. Previously, a senior politician, advocating for the biggest and most dangerous of all these agreements, declared: “Britain has agreed to investment treaty upon trade deal and there has never been a issue in the past.” An adviser on this matter accused campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries should be concerned by ISDS claims. Cautionary notes that “when companies start to realise the power they now possess, they will turn their attention from the vulnerable countries to the developed economies” were greeted by general mockery.

That threat has now materialised. Recently, oil and gas and extraction companies have lodged a historic level of cases against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – government attempts to prevent climate breakdown. Corporations have thus far won $114bn by using ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP