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How do you understand our system of government works? Maybe similar to this. Citizens choose MPs. They debate and pass bills. When a majority is achieved, the bills pass into law. The law are enforced by the courts. That's it. Well, that was how it operated in the past. Those days are over.

The Advent of Secret Tribunals

Today, foreign corporations, and the billionaires that control them, are able to litigate against governments for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases take place away from public scrutiny. Unlike our courts, these bodies provide no right of appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, including companies based in this country. The door is open only to corporations registered abroad.

If a tribunal finds that a legislative action might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

This compensation represent not tangible damages but funds the arbitrators conclude the company could potentially have made. The government might be compelled to abandon its policy. It is deterred from introducing similar legislation in that area, worried about being sued.

A System Growing Exponentially

Record numbers of legal actions are being brought, as corporations learn from each other, and investment funds bankroll lawsuits in return for a cut of the settlements. The consequence? Democratic sovereignty and democratic governance are turning into unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the choices taken by elected bodies is that this provision has been incorporated – without democratic mandate, and typically amid an atmosphere of extreme secrecy – into bilateral investment treaties.

A Real-World Example: The Whitehaven Coalmine

Twelve months ago, activists won a great victory at the High Court. The justice found that proposals to excavate the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, had been wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine would have had no impact on our carbon budgets. The Labour government later cancelled the permission the previous administration had approved. Today, this success is under threat by an foreign court accountable to only the entities petitioning it.

In August, a corporate entity whose final controllers reside in the Cayman Islands lodged a claim versus the UK government. Recently a arbitration panel in the US capital was established to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it would have generated if the mine had received permission to commence operations. The public has little idea how much this sum represents. What legal team is representing it against the British government? A sitting MP, and previous senior legal advisor in the previous government, that great patriot the MP. The administration passes a law, the domestic court validates it, then a international entity contests it through an undemocratic private court, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the tribunal on the coalmine case was convened, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. We know nothing of the case to date, but it seems likely that he may employ the arbitration process to fight the restrictions the UK enacted against him after the invasion of Ukraine. He has filed a claim against Luxembourg on these grounds, demanding a colossal sum: equivalent to half of state's yearly budget. Among the legal team acting for him in that case? Cherie Blair, married to the former British prime minister.

Legal experts contend that the EU’s procrastination in utilising seized oligarchs' funds as collateral for its financial support package arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This remarkable, secretive influence over sovereign states might be preventing the money Ukraine desperately needs.

Misleading Claims and Growing Threats

Politicians promised that these events wouldn’t happen. In 2014, a government leader, championing the most significant and hazardous of all these agreements, told us: “The UK has signed trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this topic labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “when companies start to realise the authority they now possess, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by widespread derision.

That threat has come to pass. In the current period, oil and gas and extraction companies have initiated a record number of suits against nations rich and poor, challenging – like the example of the Whitehaven project – government attempts to halt environmental catastrophe. Firms have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP