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Can you understand our system of government functions? It could be along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills pass into law. Statutes is upheld by the courts. That's it. Well, that used to be how it operated in the past. Those days are over.

The Advent of Secret Tribunals

Today, foreign corporations, along with the wealthy individuals behind them, are able to litigate against nation states for the regulations they pass, at private courts made up of commercial attorneys. These proceedings are held in secret. Differing from national judiciaries, these tribunals provide no right of appeal or judicial review. The general public are unable to file a case to them, just as our government, or even enterprises headquartered in this country. Access is granted only to corporations operating from foreign soil.

When a secret court determines that a legislative action might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, potentially billions.

This compensation represent not real financial harm but funds the tribunal officials decide the company would perhaps have made. The government could be forced to abandon its policy. It is deterred from enacting future policies of a similar nature, due to the risk of being sued.

A Process Growing Exponentially

Historically high figures of cases are being brought, as companies learn from each other, and private equity fund legal actions in return for a portion of the awards. The result? National sovereignty and popular rule are turning into prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the decisions made by elected bodies is that this clause has been written – without public consent, and frequently under conditions of total confidentiality – inside international trade agreements.

A Concrete Instance: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the senior court. The presiding officer ruled that plans to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine could have no impact on our carbon budgets. The new government then withdrew the permission the former government had granted. Now, this success faces being overturned by an secret arbitration panel reporting to no one but the corporations petitioning it.

In August, a firm whose ultimate owners reside in the offshore financial centre lodged a claim challenging the UK government. Last week a dispute settlement body in the United States was established to adjudicate on it.

This firm is litigating against the UK for the money it might have made if the mine had received permission to proceed. The public has little idea how much this could amount to. Who is representing it in opposition to the UK administration? A sitting MP, and former attorney-general in the previous government, the self-proclaimed patriot the MP. The government enacts a policy, the national judiciary upholds it, then a international entity disputes it through an unaccountable arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the coalmine case was established, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows scarce of the case so far, but it appears probable that he’ll use the arbitration process to fight the restrictions the UK enacted against him following the Russian aggression. He has previously started suing Luxembourg with similar intent, seeking $16bn: half that state's yearly budget. Among the legal team on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars argue that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its financial support package arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over democratic administrations may be obstructing the funds Ukraine urgently requires.

Empty Promises and Escalating Costs

We were assured that such things were not possible. Years ago, a former prime minister, championing the largest and riskiest of all such treaties, declared: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” An adviser on this matter described activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that only poorer nations should be concerned by these lawsuits. Predictions that “as corporations grasp the power bestowed upon them, they will turn their attention from the poorer states to the wealthy nations” were greeted by general mockery.

That threat has now materialised. In the current period, energy and extraction companies have lodged a record number of cases against nations rich and poor, contesting – similar to the Whitehaven project – official measures to stop environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars via ISDS, of which energy giants have secured eighty-four billion dollars. That equates to the combined GDP