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What is your perceive our system of government functions? Perhaps along the lines of this. The public votes for MPs. They vote on bills. Should a majority is achieved, the bills pass into law. Statutes is maintained by the courts. That's it. Yet, that’s how it operated in the past. Those days are over.

The Rise of Secret Tribunals

Today, international firms, and the billionaires who own them, can sue elected administrations for the policies they pass, at secret arbitration panels made up of corporate lawyers. These proceedings are conducted in secret. In contrast to domestic courts, these tribunals grant no right of appeal or judicial review. You or I cannot take a case to them, and neither can our government, or even businesses operating from this country. They are open exclusively to businesses based overseas.

Should an arbitration panel finds that a legislative action could harm the corporation’s projected profits, it can award damages of hundreds of millions, potentially billions.

This compensation constitute not real financial harm but compensation the arbitrators determine the company might otherwise have made. The administration may have to rescind the measure. It will be discouraged from introducing similar legislation of a similar nature, worried about being sued.

A System Growing Exponentially

Record numbers of disputes are being brought, as corporations take cues from each other, and investment funds finance suits in exchange for a share of the awards. The consequence? National sovereignty and democracy are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to override national legislation and the decisions made by legislatures is that this provision has been inserted – absent public approval, and typically amid a climate of total confidentiality – within bilateral investment treaties.

A Concrete Instance: The UK Coalmine

Twelve months ago, a conservation group won a great victory at the high court. The justice ruled that proposals to excavate the first new deep coal mine in the UK for a generation, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have zero effect on climate commitments. The incoming administration subsequently revoked the permission the previous administration had approved. Currently, this victory faces being overturned by an secret arbitration panel answering to exclusively the entities filing the suit.

Last August, a company whose final controllers are based in the tax haven initiated proceedings versus the UK government. Last week a arbitration panel in the United States was convened to adjudicate on it.

The claimant is litigating against the UK for the money it could have earned if the mine had been allowed to proceed. Citizens have no idea how much this might be. What legal team is serving as its counsel against the state? An elected representative, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the high court supports it, then a foreign company contests it through an secretive arbitration panel, and a elected official works for its behalf.

A Sanctions Lawsuit

On the same day that the court on the coal mine dispute was established, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. The public knows nothing of the case so far, but it is highly possible that he may employ the arbitration process to challenge the restrictions the UK imposed on him following the war in Ukraine. He has already initiated proceedings against a small nation on these grounds, claiming a colossal sum: half that nation's yearly income. Part of the counsel acting for him in that case? the wife of a former prime minister, spouse of the former British prime minister.

International law scholars believe that the EU’s delay in leveraging immobilised Russian assets as collateral for its financial support package arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over sovereign states could be blocking the funds Ukraine critically depends on.

Empty Promises and Mounting Risks

We were assured that such things were not possible. In 2014, a former prime minister, promoting the biggest and most dangerous of all such treaties, told us: “Britain has agreed to trade agreement upon trade deal and we have never seen a issue in the past.” An adviser on this issue described activists of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that only poorer nations had to worry about these lawsuits. Predictions that “as corporations begin to understand the authority they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were dismissed with widespread derision.

That prediction is now a reality. Recently, oil and gas and resource corporations have filed a historic level of suits against nations across the economic spectrum, opposing – similar to the Cumbrian coalmine – official measures to prevent environmental catastrophe. Companies have thus far won $114bn by using ISDS, of which energy giants have been awarded the majority. That is equivalent to the combined GDP