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Can you understand our system of government functions? Maybe something like this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills pass into law. Statutes is maintained by the courts. That's it. Well, that was how it once functioned. No longer.

The Rise of Secret Tribunals

Today, overseas companies, or the wealthy individuals who own them, have the power to sue elected administrations for the regulations they pass, at private courts made up of business advocates. Such disputes take place behind closed doors. In contrast to domestic courts, these tribunals provide no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, or even businesses based in this country. Access is granted only to corporations operating from foreign soil.

If a tribunal rules that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions, potentially billions.

This compensation constitute not real financial harm but compensation the arbitrators conclude the company might otherwise have made. The state could be forced to drop the legislation. It becomes hesitant to passing future laws along the same lines, for fear of being sued.

A System Spiralling Out of Control

Unprecedented levels of cases are being filed, as companies learn from each other, and private equity finance suits in return for a share of the awards. The outcome? Sovereignty and democracy are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the decisions made by elected bodies is that this provision has been inserted – without public consent, and typically amid an atmosphere of profound opacity – inside bilateral investment treaties.

A Concrete Example: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the high court. The judge determined that proposals to open the first deep coalmine in the UK for three decades, in Cumbria, had been illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine would have zero effect on climate commitments. The Labour government later cancelled the permission the previous administration had issued. Now, this success faces being overturned by an offshore tribunal accountable to exclusively the entities filing the suit.

In August, a corporate entity whose ultimate owners are located in the tax haven lodged a claim versus the UK government. Recently a dispute settlement body in Washington DC was set up to hear it.

This firm is litigating against the UK for the money it might have made if the mine had received permission to go ahead. We have no idea how much this sum represents. Which individual is serving as its counsel challenging the British government? An elected representative, and ex-law officer in the outgoing administration, the noted patriot the MP. The state makes a decision, the domestic court validates it, then a foreign company disputes it through an undemocratic arbitration panel, and a sitting MP acts on its behalf.

The Russian Challenge

On the same day that the tribunal on the mining lawsuit was established, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case to date, but it seems likely that he will utilise the ISDS mechanism to fight the sanctions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against a small nation for this reason, demanding a colossal sum: half that nation'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 believe that the EU’s delay in utilising seized state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a investment pact. This unprecedented, unaccountable authority over elected governments may be obstructing the finance Ukraine critically depends on.

False Assurances and Escalating Risks

We were assured that these events were not possible. In 2014, a senior politician, championing the biggest and most dangerous of all these agreements, told us: “Britain has agreed to trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this topic labelled campaigners of “alarmism … the fact is, ISDS barely touches the UK much”. The overall message was crafted to be that only poorer nations had to worry about ISDS claims. Predictions that “when companies begin to understand the influence they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with general mockery.

That prediction is now a reality. Recently, oil and gas and extraction companies have initiated a historic level of claims against nations both wealthy and developing, contesting – similar to the Cumbrian coalmine – official measures to prevent global warming. Firms have thus far won $114bn by using ISDS, of which energy giants have obtained $84bn. That represents the combined GDP