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How do you understand our political system works? It could be along the lines of this. Citizens choose MPs. They debate and pass bills. Should a majority is secured, the bills are enacted as law. The law is maintained by the courts. Simple as that. Yet, that used to be how it operated in the past. No longer.

The Advent of Secret Tribunals

Today, international firms, along with the oligarchs that control them, have the power to sue governments for the policies they pass, at offshore tribunals staffed by commercial attorneys. The cases are conducted behind closed doors. Unlike our courts, these tribunals provide no right of appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even businesses operating from this country. They are open exclusively to businesses based overseas.

If a tribunal rules that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant compensation of vast sums, running into billions.

These sums represent not tangible damages but funds the tribunal officials decide the company would perhaps have made. The administration might be compelled to abandon its policy. It will be deterred from enacting future policies along the same lines, due to the risk of incurring a lawsuit.

A Process Growing Exponentially

Unprecedented levels of disputes are being filed, as companies take cues from each other, and private equity fund legal actions for a share of a portion of the takings. The result? National sovereignty and popular rule are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override national legislation and the choices enacted by parliaments is that this clause has been incorporated – without democratic mandate, and typically amid conditions of profound opacity – inside trade treaties.

A Concrete Instance: The Cumbrian Coal Mine

Last year, a conservation group secured a significant win at the High Court. The presiding officer found that proposals to open the first deep coalmine in the UK for 30 years, in Cumbria, were illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine could have zero effect on national carbon targets. The Labour government later cancelled the licence the former government had approved. Currently, this success is under threat by an foreign court reporting to no one but the companies filing the suit.

During August, a corporate entity whose final controllers are located in the offshore financial centre lodged a claim against the UK government. The previous week a tribunal in the United States was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it might have made if the mine had been allowed to commence operations. We have no idea how much this might be. Which individual is acting on its behalf in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the high court supports it, then a foreign company contests it through an secretive private court, and a member of our parliament acts on its behalf.

A Sanctions Challenge

On the same day that the tribunal on the coalmine case was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are little of the case at present, but it appears probable that he’ll use the tribunal to challenge the sanctions the UK enacted against him subsequent to the war in Ukraine. He has initiated proceedings against a small nation on these grounds, claiming sixteen billion dollars: half that nation's yearly budget. Included in the lawyers acting for him in that case? the wife of a former prime minister, wife of the previous PM.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as guarantee for its financial support package stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a trade agreement. This remarkable, secretive influence over democratic administrations might be preventing the finance Ukraine critically depends on.

False Assurances and Mounting Costs

Politicians promised that these scenarios wouldn’t happen. In 2014, a senior politician, championing the biggest and most dangerous of all investment pacts, stated: “We’ve signed trade agreement upon trade deal and we have never seen a issue in the past.” A consultant on this issue accused activists of “scaremongering … the fact is, ISDS barely touches the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by such legal actions. Warnings that “once firms start to realise the authority they’ve been granted, they will turn their attention from the poorer states to the strong ones” were met with general mockery.

That threat is now a reality. Recently, energy and mining firms have filed a historic level of claims against nations both wealthy and developing, contesting – like the example of the UK mine – state efforts to stop global warming. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which oil majors have secured the majority. That equates to the combined GDP