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Can you perceive our system of government functions? It could be something like this. Citizens choose MPs. They legislate on bills. Should a majority is achieved, the bills are enacted as law. The law is maintained by the courts. That's it. Well, that was how it used to work. No longer.

The Rise of Secret Tribunals

Today, foreign corporations, and the oligarchs that control them, have the power to sue governments for the regulations they pass, at private courts made up of business advocates. The cases are held in secret. In contrast to domestic courts, these bodies grant no opportunity to appeal or legal review. You or I are unable to file a case to them, nor can our government, or even businesses headquartered in this country. Access is granted exclusively to entities registered abroad.

Should an arbitration panel rules that a law or policy might diminish the corporation’s expected profits, it may order compensation of vast sums, potentially billions.

These sums represent not real financial harm but funds the arbitrators determine the company might otherwise have made. The government may have to abandon its policy. It will be deterred from enacting future policies along the same lines, worried about being sued.

A Mechanism Spiralling Out of Control

Unprecedented levels of cases are being initiated, as corporations observe each other, and hedge funds finance suits in return for a portion of the awards. The consequence? Democratic sovereignty and popular rule are becoming too costly.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede national legislation and the choices made by elected bodies is that this provision has been inserted – without public consent, and often in a climate of profound opacity – inside international trade agreements.

A Real-World Example: The Whitehaven Coalmine

A year ago, environmental campaigners won a great victory at the high court. The justice found that plans to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had endorsed the bizarre claim that the mine would have no impact on climate commitments. The incoming administration then withdrew the permission the Tories had issued. Now, this victory faces being overturned by an foreign court answering to exclusively the entities filing the suit.

During August, a company whose final controllers are based in the tax haven initiated proceedings versus the UK government. Recently a arbitration panel in the United States was established to adjudicate on it.

The claimant is litigating against the UK for the profits it would have generated if the mine had been permitted to go ahead. The public has no idea how much this might be. What legal team is representing it challenging the British government? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The government passes a law, the national judiciary upholds it, then a international entity disputes it through an unaccountable private court, and a elected official represents its behalf.

A Sanctions Challenge

On the same day that the panel on the coalmine case was appointed, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. We know nothing of the case to date, but it is highly possible that he will utilise the ISDS mechanism to fight the penalties the UK levied against him after the war in Ukraine. He has filed a claim against Luxembourg with similar intent, seeking a colossal sum: half that state's yearly income. Among the legal team on his side? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists contend that the EU’s delay in using frozen oligarchs' funds as security for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a investment pact. This unprecedented, secretive influence over democratic administrations could be blocking the funds Ukraine critically depends on.

False Assurances and Growing Threats

Politicians promised that these scenarios could not occur. In 2014, a government leader, advocating for the biggest and most dangerous of all such treaties, stated: “Britain has agreed to investment treaty upon trade deal and there has not been a issue in the past.” An adviser on this issue accused campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about ISDS claims. Warnings that “as corporations begin to understand the power they’ve been granted, they will redirect their efforts from the weak nations to the strong ones” were greeted by general mockery.

That threat has now materialised. Recently, fossil fuel and mining firms have initiated a unprecedented number of claims against nations rich and poor, challenging – similar to the Cumbrian coalmine – government attempts to prevent climate breakdown. Corporations have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained the majority. That equates to the combined GDP