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Can you understand our political system works? Perhaps along the lines of this. The public votes for MPs. They legislate on bills. If a majority is achieved, the bills become law. Legislation is upheld by the courts. That's it. However, that used to be how it operated in the past. No longer.

The Emergence of Secret Tribunals

Today, foreign corporations, or the wealthy individuals that control them, have the power to sue nation states for the regulations they pass, at private courts staffed by commercial attorneys. These proceedings take place away from public scrutiny. In contrast to domestic courts, these tribunals provide no right of appeal or legal review. Ordinary citizens cannot take a case to them, nor can our government, or even businesses based in this country. They are open exclusively to corporations registered abroad.

If a tribunal finds that a law or policy could harm the corporation’s projected profits, it may order damages of vast sums, even billions.

These awards represent not real financial harm but money the tribunal officials decide the company could potentially have made. The government might be compelled to rescind the measure. It will be discouraged from introducing similar legislation in that area, worried about incurring a lawsuit.

A System Running Rampant

Record numbers of legal actions are being brought, as firms observe each other, and investment funds bankroll lawsuits for a share of a share of the takings. The consequence? Sovereignty and popular rule are now unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the decisions enacted by legislatures is that this clause has been incorporated – absent public approval, and typically amid an atmosphere of profound opacity – inside bilateral investment treaties.

A Real-World Instance: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the senior court. The judge determined that schemes to dig the first new deep coal mine in the UK for three decades, in northwest England, were found to be unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine would have zero effect on climate commitments. The new government later cancelled the consent the Tories had issued. Now, this legal outcome faces being overturned by an offshore tribunal answering to only the entities bringing the case.

During August, a firm whose ultimate owners are based in the tax haven filed a lawsuit versus the UK government. Last week a arbitration panel in the US capital was convened to hear it.

The company is seeking compensation from the UK for the profits it would have generated if the mine had been allowed to commence operations. We have no clear indication how much this might be. What legal team is acting on its behalf in opposition to the UK administration? A sitting MP, and former attorney-general in the previous government, that great patriot the MP. The state makes a decision, the domestic court upholds it, then a overseas corporation challenges it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

The Russian Challenge

On the same day that the tribunal on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case at present, but it appears probable that he’ll use the arbitration process to challenge the restrictions the UK enacted against him subsequent to the invasion of Ukraine. He has started suing another European state for this reason, demanding a colossal sum: half that nation's annual revenue. Included in the legal team acting for him in that case? a prominent lawyer, married to the ex-UK leader.

International law scholars argue that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over democratic administrations could be blocking the money Ukraine desperately needs.

Misleading Claims and Escalating Costs

The public was told that these scenarios wouldn’t happen. Previously, a former prime minister, advocating for the biggest and most dangerous of all such treaties, declared: “The UK has signed investment treaty after trade deal and there has not been a issue in the past.” A consultant on this topic described critics of “scaremongering … in reality, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by ISDS claims. Cautionary notes that “once firms start to realise the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were dismissed with scepticism.

That warning is now a reality. This year, energy and mining firms have lodged a unprecedented number of suits against nations across the economic spectrum, opposing – as in the case of the UK mine – official measures to halt climate breakdown. Companies have so far won one hundred and fourteen billion dollars through ISDS, of which oil majors have obtained $84bn. That represents the combined GDP