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How do you perceive our system of government operates? Maybe similar to this. We elect MPs. They legislate on bills. If a majority is obtained, the bills become law. The law is maintained by the courts. That's it. However, that was how it used to work. No longer.

The Emergence of Secret Tribunals

In the modern era, international firms, along with the wealthy individuals who own them, are able to litigate against governments for the laws they pass, at private courts composed of commercial attorneys. The cases are conducted behind closed doors. In contrast to domestic courts, these panels grant no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. Access is granted only to businesses registered abroad.

If a tribunal finds that a government measure could harm the corporation’s anticipated profits, it can award compensation of hundreds of millions of pounds, potentially billions.

These sums constitute not tangible damages but compensation the panel members determine the company would perhaps have made. The administration might be compelled to drop the legislation. It will be hesitant to introducing similar legislation of a similar nature, for fear of being sued.

A System Running Rampant

Unprecedented levels of disputes are being filed, as firms take cues from each other, and private equity bankroll lawsuits in return for a share of the settlements. The outcome? National sovereignty and democracy are becoming prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the choices taken by elected bodies is that this stipulation has been written – without public consent, and often in an atmosphere of extreme secrecy – within trade treaties.

A Concrete Example: The Cumbrian Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The judge ruled that schemes to open the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine could have no impact on our carbon budgets. The new government later cancelled the licence the previous administration had issued. Now, this legal outcome faces being overturned by an offshore tribunal answering to no one but the corporations filing the suit.

In August, a company whose final controllers reside in the tax haven lodged a claim against the UK government. The previous week a dispute settlement body in Washington DC was established to consider the case.

The claimant is suing the UK for the money it would have generated if the mine had been permitted to proceed. Citizens have little idea how much this sum represents. What legal team is representing it challenging the UK administration? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court supports it, then a foreign company disputes it through an unaccountable private court, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

On the same day that the court on the coalmine case was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know little of the case at present, but it is highly possible that he may employ the arbitration process to contest the penalties the UK imposed on him after the invasion of Ukraine. He has previously filed a claim against another European state for this reason, seeking $16bn: half that nation's yearly income. Part of the counsel acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

Legal experts argue that the EU’s procrastination in leveraging immobilised Russian assets as security for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over sovereign states could be blocking the money Ukraine desperately needs.

Misleading Claims and Mounting Risks

Politicians promised that these events wouldn’t happen. In 2014, a government leader, championing the most significant and hazardous of all investment pacts, declared: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this topic labelled campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries should be concerned by ISDS claims. Cautionary notes that “once firms start to realise the power they now possess, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by widespread derision.

That prediction has come to pass. In the current period, oil and gas and extraction companies have lodged a historic level of suits against nations rich and poor, contesting – as in the case of the UK mine – official measures to halt environmental catastrophe. Companies have to date won vast sums by using ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP