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What is your perceive our system of government works? Perhaps similar to this. We elect MPs. They legislate on bills. When a majority is achieved, the bills pass into law. Legislation is maintained by the courts. End of story. However, that’s how it operated in the past. No longer.

The Rise of Secret Tribunals

Today, overseas companies, along with the wealthy individuals that control them, have the power to sue governments for the regulations they pass, at offshore tribunals staffed by corporate lawyers. These proceedings take place behind closed doors. Unlike our courts, these bodies grant no opportunity to appeal or oversight by judges. You or I are barred from bringing a case to them, just as our government, including businesses operating from this country. They are open exclusively to businesses registered abroad.

If a tribunal rules that a government measure could harm the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, running into billions.

These awards are based not on tangible damages but funds the arbitrators conclude the company would perhaps have made. The state could be forced to abandon its policy. It becomes deterred from passing future laws along the same lines, worried about incurring a lawsuit.

A System Running Rampant

Unprecedented levels of legal actions are being filed, as corporations observe each other, and hedge funds fund legal actions in exchange for a portion of the takings. The result? Democratic sovereignty and popular rule are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it can trump national legislation and the rulings taken by parliaments is that this clause has been written – without public consent, and often in an atmosphere of total confidentiality – inside bilateral investment treaties.

A Real-World Example: The Whitehaven Coal Mine

Last year, a conservation group achieved a major legal triumph at the senior court. The justice determined that schemes to open the first major coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine would have had no consequence on climate commitments. The Labour government later cancelled the permission the Tories had issued. Today, this legal outcome is under threat by an offshore tribunal accountable to only the companies bringing the case.

Last August, a firm whose ultimate owners reside in the Cayman Islands initiated proceedings against the UK government. The previous week a dispute settlement body in Washington DC was established to consider the case.

This firm is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. The public has little idea how much this might be. Who is acting on its behalf in opposition to the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The government enacts a policy, the national judiciary upholds it, then a overseas corporation challenges it through an undemocratic arbitration panel, and a member of our parliament acts on its behalf.

The Russian Case

Simultaneously that the panel on the mining lawsuit was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case at present, but it is highly possible that he’ll use the tribunal to contest the restrictions the UK levied against him after the Russian aggression. He has previously filed a claim against Luxembourg with similar intent, demanding a colossal sum: an amount representing half nation's yearly income. Part of the lawyers acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Trade specialists contend that the EU’s procrastination in using frozen state funds as security for its financial support package is due to Belgium’s fear that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, undemocratic power over elected governments may be obstructing the funds Ukraine critically depends on.

False Assurances and Growing Risks

We were assured that such things were not possible. Previously, a government leader, promoting the biggest and most dangerous of all these agreements, declared: “Britain has agreed to investment treaty upon trade deal and we have never seen a case in the past.” A consultant on this topic described campaigners of “exaggeration … the truth is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that exclusively weaker states had to worry about these lawsuits. Cautionary notes that “as corporations grasp the power they now possess, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with general mockery.

That threat has now materialised. Recently, oil and gas and resource corporations have lodged a record number of cases against nations across the economic spectrum, contesting – like the example of the UK mine – state efforts to stop global warming. Firms have so far won $114bn by using ISDS, of which energy giants have secured $84bn. That equates to the combined GDP