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How do you perceive our political system operates? Maybe something like this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills become law. Legislation is maintained by the courts. That's it. Well, that was how it operated in the past. Not anymore.

The Advent of Secret Tribunals

Nowadays, foreign corporations, and the oligarchs who own them, can sue governments for the laws they pass, at secret arbitration panels composed of commercial attorneys. Such disputes take place behind closed doors. In contrast to domestic courts, these bodies allow no opportunity to appeal or judicial review. You or I cannot take a case to them, and neither can our government, or even companies operating from this country. The door is open only to businesses registered abroad.

Should an arbitration panel determines that a legislative action might diminish the corporation’s anticipated profits, it can award financial penalties of vast sums, running into billions.

These sums constitute not real financial harm but money the arbitrators determine the company would perhaps have made. The state might be compelled to rescind the measure. It becomes deterred from introducing similar legislation of a similar nature, for fear of facing litigation.

A Mechanism Spiralling Out of Control

Record numbers of cases are being brought, as firms observe each other, and investment funds bankroll lawsuits for a share of a share of the settlements. The result? National sovereignty and democracy are turning into prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede domestic law and the choices enacted by parliaments is that this stipulation has been written – absent public approval, and frequently under conditions of total confidentiality – into bilateral investment treaties.

A Concrete Example: The UK Coalmine

Last year, environmental campaigners secured a significant win at the high court. The judge ruled that schemes to excavate the first major coal mine in the UK for a generation, in northwest England, were found to be unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine could have zero effect on our carbon budgets. The incoming administration later cancelled the permission the previous administration had issued. Currently, this victory is under threat by an foreign court accountable to no one but the corporations petitioning it.

Last August, a company whose final controllers are based in the offshore financial centre initiated proceedings against the UK government. Last week a tribunal in the United States was set up to hear it.

The company is litigating against the UK for the profits it would have generated if the mine had been permitted to proceed. The public has no idea how much this might be. Who is representing it in opposition to the state? A sitting MP, and former attorney-general in the previous government, the noted patriot the MP. The administration makes a decision, the high court supports it, then a international entity challenges it through an secretive arbitration panel, and a elected official represents its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the coal mine dispute was appointed, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case so far, but it appears probable that he will utilise the tribunal to contest the restrictions the UK levied against him after the Russian aggression. He has previously started suing Luxembourg with similar intent, demanding $16bn: half that state's annual revenue. Part of the counsel representing him there? the wife of a former prime minister, wife of the previous PM.

International law scholars contend that the EU’s procrastination in leveraging immobilised oligarchs' funds as security for its financial support package arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations could be blocking the money Ukraine urgently requires.

Misleading Claims and Growing Threats

Politicians promised that such things could not occur. Previously, a government leader, championing the most significant and hazardous of all investment pacts, told us: “Britain has agreed to trade agreement after trade deal and there has not been a case in the past.” A consultant on this issue described activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “as corporations grasp the power they’ve been granted, they will turn their attention from the weak nations to the developed economies” were met with general mockery.

That threat is now a reality. In the current period, oil and gas and mining firms have filed a unprecedented number of suits against nations both wealthy and developing, contesting – like the example of the Whitehaven project – official measures to stop environmental catastrophe. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That represents the combined GDP