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What is your perceive our system of government functions? Maybe similar to this. We elect MPs. They debate and pass bills. Should a majority is obtained, the bills become law. Legislation is maintained by the courts. That's it. However, that was how it once functioned. Not anymore.

The Advent of Secret Tribunals

In the modern era, foreign corporations, and the oligarchs who own them, are able to litigate against elected administrations for the policies they pass, at secret arbitration panels staffed by business advocates. The cases take place behind closed doors. Unlike our courts, these tribunals grant no right of appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. The door is open exclusively to entities operating from foreign soil.

If a tribunal finds that a government measure may compromise the corporation’s expected profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

These sums represent not tangible damages but compensation the tribunal officials conclude the company would perhaps have made. The administration might be compelled to abandon its policy. It will be hesitant to enacting future policies of a similar nature, worried about being sued.

A System Spiralling Out of Control

Unprecedented levels of legal actions are being initiated, as corporations take cues from each other, and investment funds fund legal actions in exchange for a portion of the settlements. The result? Democratic sovereignty and democratic governance are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it can trump a country's own laws and the choices taken by elected bodies is that this provision has been written – without public consent, and typically amid an atmosphere of total confidentiality – within trade treaties.

A Specific Case: The Cumbrian Coalmine

Last year, activists won a great victory at the high court. The justice ruled that plans to excavate the first deep coalmine in the UK for a generation, in northwest England, had been illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine would have had zero effect on national carbon targets. The Labour government subsequently revoked the permission the former government had granted. Now, this success could be compromised by an foreign court accountable to exclusively the companies filing the suit.

Last August, a firm whose beneficial owners are based in the Cayman Islands initiated proceedings versus the UK government. Recently a tribunal in the United States was set up to consider the case.

The company is suing the UK for the revenue it might have made if the mine had been permitted to go ahead. We have little idea how much this could amount to. What legal team is acting on its behalf challenging the state? An elected representative, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The state enacts a policy, the domestic court supports it, then a international entity challenges it through an secretive arbitration panel, and a elected official acts on its behalf.

The Russian Lawsuit

Simultaneously that the panel on the coal mine dispute was convened, we learned from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. We know little of the case so far, but it seems likely that he’ll use the tribunal to contest the penalties the UK enacted against him following the invasion of Ukraine. He has filed a claim against a small nation for this reason, claiming a colossal sum: equivalent to half of state's yearly budget. Included in the lawyers representing him there? the wife of a former prime minister, married to the ex-UK leader.

International law scholars believe that the EU’s delay in utilising seized Russian assets as security for its aid for Ukraine stems from Belgium’s fear that it could be sued in the ISDS tribunals, under a trade agreement. This remarkable, undemocratic power over democratic administrations might be preventing the funds Ukraine desperately needs.

Empty Promises and Escalating Risks

The public was told that such things wouldn’t happen. Previously, a former prime minister, championing the most significant and hazardous of all these agreements, told us: “Britain has agreed to investment treaty upon trade deal and there has never been a problem in the past.” An adviser on this issue described activists of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries needed to fear such legal actions. Cautionary notes that “when companies begin to understand the power they now possess, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with general mockery.

That threat is now a reality. Recently, fossil fuel and mining firms have lodged a unprecedented number of claims against nations across the economic spectrum, challenging – like the example of the UK mine – government attempts to prevent environmental catastrophe. Companies have to date won $114bn by using ISDS, of which energy giants have been awarded the majority. That is equivalent to the combined GDP