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What is your understand our political system works? Maybe something like this. The public votes for MPs. They vote on bills. When a majority is secured, the bills are enacted as law. Statutes is maintained by the courts. That's it. Well, that used to be how it operated in the past. Not anymore.

The Emergence of Secret Courts

Nowadays, international firms, or the billionaires who own them, have the power to sue nation states for the policies they pass, at offshore tribunals made up of commercial attorneys. Such disputes are conducted in secret. Unlike our courts, these bodies provide no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies based in this country. Access is granted exclusively to entities operating from foreign soil.

Should an arbitration panel rules that a legislative action may compromise the corporation’s anticipated profits, it may order financial penalties of vast sums, even billions.

These awards are based not on real financial harm but compensation the arbitrators decide the company might otherwise have made. The government could be forced to drop the legislation. It will be discouraged from passing future laws along the same lines, for fear of facing litigation.

A Mechanism Running Rampant

Unprecedented levels of cases are being brought, as corporations learn from each other, and private equity bankroll lawsuits for a share of a portion of the awards. The consequence? Sovereignty and democratic governance are becoming too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the decisions taken by legislatures is that this provision has been written – without public consent, and typically amid a climate of extreme secrecy – inside trade treaties.

A Specific Example: The Cumbrian Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The presiding officer found that schemes to dig the first major coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had agreed to the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The incoming administration later cancelled the consent the former government had granted. Currently, this victory faces being overturned by an offshore tribunal accountable to exclusively the entities petitioning it.

In August, a corporate entity whose ultimate owners are based in the Cayman Islands initiated proceedings challenging the UK government. The previous week a dispute settlement body in the United States was convened to consider the case.

The claimant is suing the UK for the money it would have generated if the mine had received permission to proceed. Citizens have no clear indication how much this might be. What legal team is representing it challenging the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court validates it, then a international entity contests it through an undemocratic arbitration panel, and a elected official represents its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was established, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. We know scarce of the case to date, but it appears probable that he’ll use the ISDS mechanism to challenge the sanctions the UK levied against him following the Russian aggression. He has previously initiated proceedings against a small nation on these grounds, claiming a colossal sum: an amount representing half government’s yearly income. Part of the legal team representing him there? Cherie Blair, spouse of the ex-UK leader.

Trade specialists contend that the EU’s procrastination in using frozen Russian assets as guarantee for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, unaccountable authority over elected governments may be obstructing the money Ukraine critically depends on.

Misleading Claims and Growing Threats

Politicians promised that these scenarios were not possible. Years ago, a senior politician, advocating for the biggest and most dangerous of all investment pacts, stated: “The UK has signed trade agreement upon trade deal and there has not been a problem in the past.” An adviser on this topic labelled critics of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries should be concerned by ISDS claims. Warnings that “when companies start to realise the influence bestowed upon them, they will turn their attention from the weak nations to the strong ones” were dismissed with scepticism.

That threat has come to pass. Recently, fossil fuel and mining firms have lodged a unprecedented number of claims against nations across the economic spectrum, contesting – as in the case of the UK mine – government attempts to stop environmental catastrophe. Companies have so far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have secured the majority. That represents the combined GDP