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What is your understand our political system works? Maybe something like this. Citizens choose MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. The law is maintained by the courts. End of story. However, that used to be how it operated in the past. No longer.

The Emergence of Secret Tribunals

In the modern era, international firms, or the billionaires that control them, have the power to sue elected administrations for the regulations they pass, at private courts staffed by corporate lawyers. The cases are conducted behind closed doors. In contrast to domestic courts, these bodies grant no avenue for appeal or judicial review. Ordinary citizens are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. They are open only to entities based overseas.

When a secret court finds that a government measure might diminish the corporation’s projected profits, it has the power to grant financial penalties of vast sums, potentially billions.

These awards constitute not actual losses but funds the panel members conclude the company would perhaps have made. The state may have to drop the legislation. It becomes deterred from enacting future policies of a similar nature, for fear of facing litigation.

A Process Spiralling Out of Control

Record numbers of cases are being brought, as firms observe each other, and hedge funds bankroll lawsuits in exchange for a portion of the awards. The consequence? Sovereignty and popular rule are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the decisions taken by elected bodies is that this clause has been incorporated – without democratic mandate, and typically amid an atmosphere of profound opacity – inside trade treaties.

A Real-World Instance: The Whitehaven Coal Mine

A year ago, activists won a great victory at the senior court. The justice determined that plans to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the Conservative government, which had agreed to the questionable argument that the mine would have zero effect on climate commitments. The incoming administration subsequently revoked the consent the former government had approved. Today, this legal outcome is under threat by an secret arbitration panel reporting to only the companies petitioning it.

Last August, a company whose ultimate owners are based in the tax haven filed a lawsuit against the UK government. Recently a arbitration panel in the US capital was set up to adjudicate on it.

The claimant is seeking compensation from the UK for the money it might have made if the mine had received permission to commence operations. We have no idea how much this sum represents. What legal team is representing it challenging the British government? An elected representative, and former attorney-general in the previous government, the noted patriot the MP. The government enacts a policy, the high court supports it, then a foreign company challenges it through an secretive arbitration panel, and a elected official represents its behalf.

The Russian Lawsuit

On the same day that the court on the coalmine case was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know scarce of the case to date, but it is highly possible that he will utilise the arbitration process to fight the restrictions the UK enacted against him after the invasion of Ukraine. He has previously initiated proceedings against another European state on these grounds, claiming sixteen billion dollars: half that state's yearly income. Part of the lawyers acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

International law scholars believe that the EU’s delay in leveraging immobilised state funds as collateral for its financial support package is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments could be blocking the funds Ukraine desperately needs.

False Assurances and Growing Threats

We were assured that these scenarios could not occur. Years ago, a senior politician, advocating for the most significant and hazardous of all such treaties, told us: “The UK has signed trade agreement upon trade deal and there has never been a problem in the past.” An adviser on this topic accused campaigners of “scaremongering … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that exclusively weaker states had to worry about ISDS claims. Warnings that “once firms start to realise the power they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” were met with widespread derision.

That threat is now a reality. In the current period, oil and gas and resource corporations have filed a unprecedented number of claims against nations rich and poor, contesting – like the example of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Firms have thus far won vast sums via ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP