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Can you understand our political system functions? Maybe along the lines of this. The public votes for MPs. They vote on bills. When a majority is secured, the bills become law. Statutes is maintained by the courts. That's it. Yet, that used to be how it once functioned. No longer.

The Advent of Secret Tribunals

Today, foreign corporations, or the wealthy individuals who own them, are able to litigate against elected administrations for the laws they pass, at private courts staffed by business advocates. Such disputes take place in secret. Differing from national judiciaries, these bodies grant no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, including enterprises operating from this country. The door is open only to businesses registered abroad.

When a secret court determines that a law or policy may compromise the corporation’s projected profits, it can award financial penalties of hundreds of millions, potentially billions.

These awards represent not actual losses but money the tribunal officials decide the company would perhaps have made. The administration could be forced to rescind the measure. It will be hesitant to introducing similar legislation of a similar nature, for fear of being sued.

A System Growing Exponentially

Record numbers of disputes are being filed, as companies learn from each other, and hedge funds fund legal actions in exchange for a cut of the takings. The result? Democratic sovereignty and popular rule are becoming too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it can trump a country's own laws and the rulings enacted by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid conditions of profound opacity – inside trade treaties.

A Real-World Example: The Cumbrian Coal Mine

A year ago, environmental campaigners secured a significant win at the senior court. The presiding officer determined that proposals to excavate the first deep coalmine in the UK for three decades, in northwest England, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine would have no consequence on national carbon targets. The incoming administration later cancelled the licence the former government had approved. Now, this success faces being overturned by an foreign court accountable to no one but the entities bringing the case.

In August, a company whose final controllers are located in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the US capital was established to adjudicate on it.

The company is litigating against the UK for the money it might have made if the mine had received permission to proceed. The public has no clear indication how much this might be. Which individual is serving as its counsel against the UK administration? A sitting MP, and former attorney-general in the Conservative government, that great patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court validates it, then a foreign company contests it through an undemocratic arbitration panel, and a elected official acts on its behalf.

A Sanctions Case

Concurrently that the tribunal on the coalmine case was appointed, information emerged from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case at present, but it seems likely that he may employ the tribunal to fight the restrictions the UK enacted against him after the Russian aggression. He has already filed a claim against a small nation on these grounds, claiming sixteen billion dollars: an amount representing half government’s yearly income. Among the legal team on his side? Cherie Blair, wife of the previous PM.

Legal experts argue that the EU’s delay in utilising seized Russian assets as collateral for its aid for Ukraine stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This unprecedented, undemocratic power over democratic administrations may be obstructing the funds Ukraine urgently requires.

False Assurances and Growing Threats

The public was told that these events could not occur. In 2014, a government leader, advocating for the largest and riskiest of all these agreements, stated: “Britain has agreed to trade deal after trade deal and we have never seen a issue in the past.” A consultant on this issue labelled activists of “alarmism … in reality, ISDS barely touches the UK much”. The general impression seemed to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “as corporations grasp the power bestowed upon them, they will turn their attention from the vulnerable countries to the wealthy nations” were greeted by scepticism.

That prediction is now a reality. In the current period, fossil fuel and extraction companies have initiated a record number of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – official measures to stop environmental catastrophe. Corporations have so far won $114bn by using ISDS, of which fossil fuel companies have been awarded the majority. That represents the combined GDP