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How do you understand our system of government works? It could be similar to this. Citizens choose MPs. They vote on bills. If a majority is secured, the bills become law. Legislation are enforced by the courts. End of story. However, that’s how it once functioned. Those days are over.

The Emergence of Secret Tribunals

Nowadays, foreign corporations, or the wealthy individuals behind them, are able to litigate against governments for the regulations they pass, at secret arbitration panels composed of corporate lawyers. These proceedings are held in secret. Unlike our courts, these bodies provide no opportunity to appeal or judicial review. The general public are unable to file a case to them, and neither can our government, or even businesses operating from this country. They are open solely for entities operating from foreign soil.

When a secret court rules that a legislative action may compromise the corporation’s anticipated profits, it may order damages of vast sums, potentially billions.

These awards are based not on real financial harm but funds the panel members determine the company could potentially have made. The government might be compelled to drop the legislation. It becomes deterred from passing future laws in that area, worried about facing litigation.

A Process Spiralling Out of Control

Historically high figures of legal actions are being initiated, as corporations take cues from each other, and hedge funds bankroll lawsuits in return for a portion of the takings. The result? Sovereignty and democracy are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the decisions taken by legislatures is that this stipulation has been inserted – without democratic mandate, and frequently under a climate of extreme secrecy – inside trade treaties.

A Specific Example: The Cumbrian Coalmine

Twelve months ago, activists achieved a major legal triumph at the High Court. The justice determined that plans to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine could have zero effect on climate commitments. The Labour government subsequently revoked the licence the former government had approved. Now, this victory is under threat by an secret arbitration panel accountable to no one but the corporations bringing the case.

During August, a corporate entity whose final controllers are based in the Cayman Islands lodged a claim against the UK government. The previous week a arbitration panel in Washington DC was set up to consider the case.

The claimant is suing the UK for the revenue it might have made if the mine had received permission to proceed. Citizens have little idea how much this sum represents. What legal team is acting on its behalf challenging the British government? An elected representative, and ex-law officer in the previous government, that great patriot the MP. The state makes a decision, the domestic court upholds it, then a international entity challenges it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the coalmine case was appointed, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows little of the case to date, but it appears probable that he may employ the ISDS mechanism to challenge the sanctions the UK imposed on him subsequent to the Russian aggression. He has previously filed a claim against another European state on these grounds, demanding $16bn: equivalent to half of government’s yearly budget. Among the lawyers acting for him in that case? a prominent lawyer, spouse of the previous PM.

Trade specialists contend that the EU’s delay in using frozen state funds as collateral for its aid for Ukraine is due to concerns within Belgium that it could be sued in the offshore corporate courts, under a trade agreement. This remarkable, secretive influence over sovereign states may be obstructing the funds Ukraine critically depends on.

False Assurances and Escalating Costs

We were assured that these events could not occur. In 2014, a government leader, championing the most significant and hazardous of all these agreements, stated: “The UK has signed trade agreement upon trade deal and we have never seen a case in the past.” A consultant on this issue accused campaigners of “scaremongering … the truth is, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries needed to fear ISDS claims. Warnings that “as corporations begin to understand the authority bestowed upon them, they will turn their attention from the weak nations to the developed economies” were dismissed with scepticism.

That warning has now materialised. Recently, oil and gas and resource corporations have lodged a record number of claims against nations rich and poor, opposing – similar to the UK mine – state efforts to stop climate breakdown. Companies have to date won vast sums through ISDS, of which oil majors have secured $84bn. That equates to the combined GDP