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Can you understand our political system operates? Perhaps along the lines of this. We elect MPs. They vote on bills. If a majority is obtained, the bills become law. Legislation is upheld by the courts. Simple as that. Well, that’s how it used to work. No longer.

The Advent of Secret Tribunals

Today, foreign corporations, or the billionaires that control them, can sue elected administrations for the laws they pass, at secret arbitration panels made up of corporate lawyers. The cases take place in secret. In contrast to domestic courts, these tribunals grant no opportunity to appeal or judicial review. The general public are barred from bringing a case to them, nor can our government, or even enterprises operating from this country. Access is granted exclusively to entities based overseas.

Should an arbitration panel rules that a law or policy could harm the corporation’s expected profits, it may order financial penalties of hundreds of millions, even billions.

These awards constitute not real financial harm but money the panel members decide the company might otherwise have made. The state might be compelled to drop the legislation. It will be deterred from introducing similar legislation in that area, for fear of incurring a lawsuit.

A Process Growing Exponentially

Record numbers of cases are being initiated, as firms observe each other, and hedge funds fund legal actions in exchange for a share of the takings. The outcome? National sovereignty and popular rule are turning into unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the choices made by legislatures is that this stipulation has been written – without public consent, and frequently under conditions of profound opacity – within international trade agreements.

A Concrete Case: The Cumbrian Coalmine

Twelve months ago, a conservation group secured a significant win at the high court. The justice determined that proposals to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine could have no consequence on our carbon budgets. The incoming administration later cancelled the permission the Tories had approved. Now, this victory is under threat by an foreign court reporting to exclusively the corporations bringing the case.

In August, a firm whose final controllers are based in the offshore financial centre lodged a claim against the UK government. The previous week a tribunal in the US capital was convened to hear it.

The company is litigating against the UK for the profits it could have earned if the mine had received permission to proceed. The public has no idea how much this might be. Who is serving as its counsel challenging the British government? A sitting MP, and former attorney-general in the Conservative government, the noted patriot Geoffrey Cox. The state passes a law, the domestic court validates it, then a overseas corporation disputes it through an undemocratic arbitration panel, and a elected official represents its behalf.

The Russian Lawsuit

On the same day that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows scarce of the case at present, but it appears probable that he may employ the arbitration process to challenge the penalties the UK imposed on him following the invasion of Ukraine. He has initiated proceedings against another European state on these grounds, demanding sixteen billion dollars: equivalent to half of nation's yearly income. Among the lawyers representing him there? a prominent lawyer, wife of the former British prime minister.

Trade specialists contend that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its financial support package is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, secretive influence over sovereign states might be preventing the finance Ukraine urgently requires.

False Assurances and Mounting Threats

The public was told that such things were not possible. Previously, a former prime minister, championing the most significant and hazardous of all such treaties, stated: “The UK has signed trade deal upon trade deal and there has never been a case in the past.” An expert on this matter labelled campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that only poorer nations should be concerned by these lawsuits. Warnings that “when companies start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were greeted by scepticism.

That warning is now a reality. This year, oil and gas and resource corporations have initiated a historic level of suits against nations both wealthy and developing, opposing – like the example of the Whitehaven project – government attempts to prevent environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have secured the majority. That is equivalent to the combined GDP