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What is your perceive our system of government works? It could be along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. The law is upheld by the courts. That's it. Well, that’s how it operated in the past. No longer.

The Rise of Secret Tribunals

In the modern era, foreign corporations, or the billionaires that control them, have the power to sue governments for the laws they pass, at offshore tribunals composed of commercial attorneys. These proceedings are conducted away from public scrutiny. Differing from national judiciaries, these bodies provide no opportunity to appeal or oversight by judges. You or I are barred from bringing a case to them, nor can our government, including enterprises headquartered in this country. The door is open solely for entities registered abroad.

When a secret court determines that a government measure might diminish the corporation’s projected profits, it can award financial penalties of hundreds of millions, even billions.

These sums represent not tangible damages but funds the arbitrators determine the company might otherwise have made. The state might be compelled to rescind the measure. It will be deterred from enacting future policies of a similar nature, worried about being sued.

A Process Growing Exponentially

Historically high figures of legal actions are being initiated, as firms observe each other, and investment funds fund legal actions in exchange for a share of the awards. The outcome? National sovereignty and democracy are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it can trump domestic law and the decisions made by parliaments is that this clause has been inserted – without democratic mandate, and often in conditions of extreme secrecy – into bilateral investment treaties.

A Concrete Case: The Whitehaven Coalmine

Last year, activists won a great victory at the senior court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for three decades, in Cumbria, had been illegally sanctioned by the outgoing administration, which had endorsed the questionable argument that the mine would have had no consequence on climate commitments. The incoming administration later cancelled the consent the former government had issued. Today, this victory is under threat by an foreign court reporting to no one but the corporations bringing the case.

During August, a firm whose final controllers reside in the offshore financial centre lodged a claim versus the UK government. Recently a arbitration panel in the United States was convened to adjudicate on it.

The claimant is suing the UK for the money it would have generated if the mine had been allowed to proceed. The public has no clear indication how much this could amount to. What legal team is acting on its behalf in opposition to the British government? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot the MP. The administration passes a law, the national judiciary upholds it, then a international entity challenges it through an unaccountable offshore tribunal, and a sitting MP represents its behalf.

The Russian Case

Concurrently that the court on the mining lawsuit was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. We know scarce of the case to date, but it appears probable that he will utilise the arbitration process to challenge the penalties the UK enacted against him after the Russian aggression. He has already filed a claim against a small nation on these grounds, claiming $16bn: half that nation's yearly budget. Part of the lawyers acting for him in that case? Cherie Blair, wife of the ex-UK leader.

Trade specialists argue that the EU’s procrastination in using frozen state funds as security for its financial support package is due to concerns within Belgium that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, undemocratic power over elected governments could be blocking the finance Ukraine critically depends on.

Empty Promises and Growing Risks

Politicians promised that such things were not possible. Years ago, a former prime minister, promoting the most significant and hazardous of all investment pacts, stated: “We’ve signed investment treaty upon trade deal and there has not been a issue in the past.” An adviser on this topic labelled critics of “scaremongering … the truth is, ISDS does not affect the UK much”. The general impression was crafted to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “as corporations start to realise the power bestowed upon them, they will shift their focus from the poorer states to the developed economies” were dismissed with scepticism.

That threat has come to pass. This year, fossil fuel and mining firms have filed a unprecedented number of suits against nations rich and poor, opposing – like the example of the Cumbrian coalmine – state efforts to halt climate breakdown. Corporations have to date won vast sums through ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP