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What is your understand our system of government functions? Maybe along the lines of this. We elect MPs. They legislate on bills. When a majority is obtained, the bills become law. The law is upheld by the courts. That's it. Yet, that used to be how it once functioned. Those days are over.

The Rise of Secret Courts

Today, foreign corporations, along with the oligarchs behind them, have the power to sue elected administrations for the policies they pass, at offshore tribunals made up of corporate lawyers. Such disputes take place in secret. Differing from national judiciaries, these tribunals grant no avenue for appeal or legal review. You or I are barred from bringing a case to them, and neither can our government, or even businesses headquartered in this country. They are open solely for businesses based overseas.

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

These sums are based not on actual losses but compensation the tribunal officials determine the company could potentially have made. The administration might be compelled to abandon its policy. It will be discouraged from introducing similar legislation along the same lines, for fear of being sued.

A Mechanism Growing Exponentially

Record numbers of cases are being initiated, as companies learn from each other, and private equity fund legal actions in exchange for a share of the settlements. The outcome? National sovereignty and popular rule are turning into unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the decisions taken by legislatures is that this provision has been incorporated – without public consent, and frequently under a climate of profound opacity – into bilateral investment treaties.

A Concrete Example: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer found that proposals to dig the first new deep coal mine in the UK for 30 years, in Cumbria, were found to be wrongly permitted by the previous government, which had endorsed the questionable argument that the mine could have no impact on national carbon targets. The new government later cancelled the permission the Tories had granted. Now, this legal outcome faces being overturned by an secret arbitration panel answering to only the corporations filing the suit.

In August, a firm whose ultimate owners are based in the offshore financial centre filed a lawsuit versus the UK government. Last week a arbitration panel in the US capital was set up to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it would have generated if the mine had been allowed to proceed. We have no clear indication how much this might be. Who is acting on its behalf in opposition to the British government? A member of parliament, and ex-law officer in the previous government, the noted patriot the MP. The government makes a decision, the high court supports it, then a foreign company challenges it through an undemocratic arbitration panel, and a elected official acts on its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows nothing of the case at present, but it is highly possible that he’ll use the arbitration process to fight the sanctions the UK imposed on him subsequent to the Russian aggression. He has already started suing a small nation for this reason, seeking sixteen billion dollars: equivalent to half of state's yearly income. Part of the counsel acting for him in that case? Cherie Blair, married to the former British prime minister.

Legal experts argue that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these events wouldn’t happen. Years ago, a government leader, promoting the biggest and most dangerous of all investment pacts, told us: “The UK has signed investment treaty upon trade deal and there has never been a case in the past.” An expert on this issue accused campaigners of “alarmism … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear such legal actions. Cautionary notes that “when companies start to realise the authority they now possess, they will shift their focus from the weak nations to the developed economies” were met with scepticism.

That warning is now a reality. This year, oil and gas and mining firms have filed a record number of claims against nations both wealthy and developing, challenging – like the example of the UK mine – government attempts to prevent climate breakdown. Companies have thus far won vast sums by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP