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What is your understand our political system works? It could be something like this. Citizens choose MPs. They debate and pass bills. When a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. End of story. Well, that used to be how it operated in the past. No longer.

The Rise of Secret Tribunals

In the modern era, international firms, along with the oligarchs that control them, have the power to sue governments for the regulations they pass, at private courts made up of business advocates. Such disputes are held behind closed doors. Differing from national judiciaries, these panels allow no avenue for appeal or legal review. The general public are unable to file a case to them, just as our government, or even companies operating from this country. They are open only to businesses operating from foreign soil.

When a secret court rules that a law or policy may compromise the corporation’s anticipated profits, it may order compensation of hundreds of millions, even billions.

These awards are based not on tangible damages but funds the tribunal officials conclude the company could potentially have made. The government could be forced to rescind the measure. It will be hesitant to introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of legal actions are being filed, as corporations learn from each other, and private equity fund legal actions for a share of a portion of the takings. The result? Democratic sovereignty and popular rule are turning into prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede domestic law and the choices enacted by parliaments is that this clause has been inserted – without democratic mandate, and frequently under conditions of profound opacity – into bilateral investment treaties.

A Real-World Example: The Whitehaven Coal Mine

A year ago, a conservation group achieved a major legal triumph at the senior court. The judge determined that proposals to excavate the first deep coalmine in the UK for 30 years, in northwest England, were illegally sanctioned by the previous government, which had accepted the questionable argument that the mine could have no consequence on national carbon targets. The Labour government then withdrew the consent the former government had issued. Now, this victory could be compromised by an secret arbitration panel answering to no one but the companies petitioning it.

During August, a company whose beneficial owners are located in the offshore financial centre initiated proceedings against the UK government. Recently a dispute settlement body in the US capital was set up to consider the case.

This firm is litigating against the UK for the money it could have earned if the mine had received permission to commence operations. The public has no idea how much this sum represents. Which individual is serving as its counsel challenging the British government? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government enacts a policy, the high court upholds it, then a foreign company disputes it through an unaccountable private court, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

On the same day that the court on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows nothing of the case to date, but it is highly possible that he will utilise the arbitration process to fight the restrictions the UK levied against him after the Russian aggression. He has previously initiated proceedings against a small nation for this reason, demanding a colossal sum: half that nation's yearly budget. Part of the counsel on his side? Cherie Blair, wife of the ex-UK leader.

Legal experts argue that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its financial support package is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments could be blocking the finance Ukraine urgently requires.

Empty Promises and Growing Risks

The public was told that such things wouldn’t happen. Years ago, a former prime minister, promoting the largest and riskiest of all such treaties, declared: “We’ve signed trade agreement upon trade deal and we have never seen a issue in the past.” An adviser on this topic accused critics of “exaggeration … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries had to worry about these lawsuits. Warnings that “when companies begin to understand the authority they now possess, they will shift their focus from the poorer states to the developed economies” were greeted by scepticism.

That threat has now materialised. In the current period, oil and gas and resource corporations have filed a unprecedented number of cases against nations rich and poor, opposing – similar to the Cumbrian coalmine – official measures to prevent global warming. Corporations have thus far won vast sums via ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP