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What is your understand our political system operates? It could be something like this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. Statutes is upheld by the courts. End of story. However, that was how it used to work. Those days are over.

The Rise of Secret Tribunals

Today, foreign corporations, along with the billionaires who own them, can sue nation states for the policies they pass, at secret arbitration panels made up of commercial attorneys. Such disputes take place away from public scrutiny. Unlike our courts, these bodies allow no avenue for appeal or oversight by judges. You or I cannot take a case to them, nor can our government, or even businesses based in this country. Access is granted exclusively to entities registered abroad.

Should an arbitration panel rules that a legislative action could harm the corporation’s projected profits, it has the power to grant damages of vast sums, running into billions.

These sums are based not on real financial harm but compensation the tribunal officials determine the company might otherwise have made. The state could be forced to abandon its policy. It will be hesitant to passing future laws in that area, for fear of facing litigation.

A System Running Rampant

Historically high figures of cases are being brought, as firms take cues from each other, and investment funds bankroll lawsuits in return for a cut of the settlements. The consequence? National sovereignty and popular rule are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the rulings enacted by legislatures is that this provision has been written – without democratic mandate, and typically amid conditions of profound opacity – within trade treaties.

A Specific Example: The UK Coal Mine

Twelve months ago, activists won a great victory at the senior court. The presiding officer determined that proposals to dig the first new deep coal mine in the UK for 30 years, in northwest England, had been unlawfully approved by the previous government, which had agreed to the questionable argument that the mine would have had no impact on climate commitments. The incoming administration then withdrew the licence the Tories had granted. Now, this success faces being overturned by an foreign court accountable to only the companies bringing the case.

In August, a company whose beneficial owners are located in the Cayman Islands lodged a claim challenging the UK government. Recently a dispute settlement body in the United States was established to consider the case.

The company is seeking compensation from the UK for the money it would have generated if the mine had been allowed to go ahead. We have no clear indication how much this might be. What legal team is acting on its behalf in opposition to the UK administration? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot the MP. The state makes a decision, the national judiciary upholds it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a elected official works for its behalf.

The Russian Challenge

Concurrently that the panel on the coalmine case was established, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows scarce of the case to date, but it appears probable that he’ll use the ISDS mechanism to fight the sanctions the UK enacted against him after the war in Ukraine. He has already started suing a small nation with similar intent, claiming a colossal sum: half that state's yearly income. Included in the lawyers representing him there? a prominent lawyer, spouse of the previous PM.

International law scholars argue that the EU’s delay in utilising seized state funds as security for its financial support package stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, unaccountable authority over elected governments could be blocking the finance Ukraine desperately needs.

Misleading Claims and Growing Costs

The public was told that such things could not occur. In 2014, a government leader, championing the most significant and hazardous of all such treaties, told us: “The UK has signed investment treaty after trade deal and there has not been a problem in the past.” A consultant on this matter labelled activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that only poorer nations had to worry about these lawsuits. Predictions that “as corporations grasp the power bestowed upon them, they will shift their focus from the poorer states to the developed economies” were met with scepticism.

That prediction is now a reality. In the current period, fossil fuel and resource corporations have lodged a record number of cases against nations across the economic spectrum, challenging – similar to the Whitehaven project – government attempts to stop climate breakdown. Companies have thus far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have been awarded $84bn. That is equivalent to the combined GDP