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What is your perceive our political system operates? It could be similar to this. Citizens choose MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. Statutes is maintained by the courts. That's it. Well, that’s how it once functioned. Not anymore.

The Advent of Secret Tribunals

Today, international firms, or the wealthy individuals that control them, can sue elected administrations for the regulations they pass, at secret arbitration panels staffed by commercial attorneys. Such disputes are conducted away from public scrutiny. Unlike our courts, these panels grant no right of appeal or oversight by judges. The general public are unable to file a case to them, just as our government, including enterprises operating from this country. They are open only to corporations registered abroad.

If a tribunal finds that a government measure may compromise the corporation’s projected profits, it can award damages of vast sums, even billions.

This compensation constitute not tangible damages but compensation the arbitrators determine the company would perhaps have made. The government might be compelled to abandon its policy. It is hesitant to enacting future policies along the same lines, due to the risk of being sued.

A Mechanism Spiralling Out of Control

Record numbers of legal actions are being brought, as corporations take cues from each other, and investment funds finance suits for a share of a portion of the awards. The result? Democratic sovereignty and democratic governance are now prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the rulings enacted by legislatures is that this provision has been incorporated – without democratic mandate, and typically amid a climate of profound opacity – into international trade agreements.

A Real-World Instance: The Cumbrian Coalmine

Twelve months ago, a conservation group won a great victory at the senior court. The judge determined that proposals to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be unlawfully approved by the previous government, which had agreed to the questionable argument that the mine would have had no impact on our carbon budgets. The Labour government subsequently revoked the consent the previous administration had approved. Today, this success is under threat by an offshore tribunal answering to no one but the corporations filing the suit.

In August, a firm whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Recently a tribunal in the US capital was set up to consider the case.

The company is litigating against the UK for the revenue it could have earned if the mine had received permission to proceed. We have no clear indication how much this sum represents. What legal team is representing it against the state? A member of parliament, and former attorney-general in the Conservative government, the noted patriot the MP. The state enacts a policy, the high court upholds it, then a international entity challenges it through an unaccountable offshore tribunal, and a sitting MP represents its behalf.

A Sanctions Challenge

Concurrently that the tribunal on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows nothing of the case so far, but it appears probable that he’ll use the ISDS mechanism to contest the penalties the UK enacted against him after the war in Ukraine. He has previously initiated proceedings against Luxembourg for this reason, demanding a colossal sum: equivalent to half of nation's annual revenue. Part of the lawyers representing him there? Cherie Blair, wife of the previous PM.

Trade specialists contend that the EU’s hesitation in utilising seized state funds as collateral for its aid for Ukraine stems from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, secretive influence over democratic administrations may be obstructing the money Ukraine urgently requires.

Misleading Claims and Mounting Threats

Politicians promised that these scenarios wouldn’t happen. Years ago, a government leader, promoting the biggest and most dangerous of all these agreements, told us: “The UK has signed trade agreement after trade deal and there has not been a problem in the past.” An adviser on this matter labelled campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about such legal actions. Warnings that “when companies grasp the influence bestowed upon them, they will turn their attention from the poorer states to the strong ones” were dismissed with widespread derision.

That warning has now materialised. This year, energy and resource corporations have lodged a historic level of claims against nations rich and poor, contesting – similar to the Cumbrian coalmine – official measures to halt environmental catastrophe. Companies have to date won $114bn via ISDS, of which fossil fuel companies have been awarded the majority. That is equivalent to the combined GDP