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Can you understand our political system operates? It could be along the lines of this. We elect MPs. They legislate on bills. Should a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. That's it. However, that used to be how it once functioned. No longer.

The Advent of Secret Tribunals

In the modern era, overseas companies, or the billionaires behind them, can sue nation states for the regulations they pass, at secret arbitration panels staffed by commercial attorneys. These proceedings take place in secret. Unlike our courts, these panels grant no opportunity to appeal or judicial review. You or I cannot take a case to them, just as our government, including enterprises based in this country. Access is granted exclusively to businesses based overseas.

When a secret court rules that a law or policy could harm the corporation’s projected profits, it has the power to grant damages of vast sums, running into billions.

These awards are based not on actual losses but money the panel members decide the company would perhaps have made. The administration could be forced to drop the legislation. It will be hesitant to introducing similar legislation along the same lines, worried about incurring a lawsuit.

A System Spiralling Out of Control

Historically high figures of cases are being filed, as companies observe each other, and hedge funds bankroll lawsuits in return for a share of the takings. The consequence? Democratic sovereignty and democracy are becoming too costly.

The system is called “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the choices made by legislatures is that this provision has been inserted – absent public approval, and typically amid a climate of total confidentiality – into trade treaties.

A Real-World Case: The Cumbrian Coal Mine

Last year, a conservation group secured a significant win at the high court. The presiding officer determined that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, had been illegally sanctioned by the previous government, which had agreed to the questionable argument that the mine would have zero effect on national carbon targets. The Labour government later cancelled the licence the Tories had approved. Currently, this legal outcome is under threat by an secret arbitration panel accountable to only the companies bringing the case.

During August, a firm whose ultimate owners are based in the tax haven initiated proceedings versus the UK government. The previous week a dispute settlement body in the United States was set up to consider the case.

The claimant is suing the UK for the money it might have made if the mine had been permitted to proceed. Citizens have no idea how much this could amount to. Which individual is acting on its behalf challenging the British government? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The state makes a decision, the high court supports it, then a overseas corporation challenges it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Case

On the same day that the panel on the coalmine case was convened, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case to date, but it seems likely that he will utilise the arbitration process to challenge the sanctions the UK imposed on him following the war in Ukraine. He has started suing a small nation with similar intent, demanding sixteen billion dollars: equivalent to half of government’s yearly income. Part of the counsel acting for him in that case? Cherie Blair, spouse of the former British prime minister.

Trade specialists believe that the EU’s procrastination in using frozen state funds as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This unprecedented, unaccountable authority over sovereign states might be preventing the funds Ukraine urgently requires.

Empty Promises and Growing Threats

We were assured that such things were not possible. Years ago, a senior politician, advocating for the most significant and hazardous of all such treaties, declared: “We’ve signed trade agreement upon trade deal and we have never seen a problem in the past.” A consultant on this issue labelled campaigners of “alarmism … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that solely developing countries needed to fear ISDS claims. Warnings that “as corporations grasp the influence they’ve been granted, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with general mockery.

That prediction has come to pass. In the current period, energy and extraction companies have initiated a unprecedented number of cases against nations rich and poor, challenging – like the example of the Whitehaven project – state efforts to halt environmental catastrophe. Companies have so far won vast sums through ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP