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What is your reckon our political system works? It could be along the lines of this. Citizens choose MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. End of story. Yet, that used to be how it operated in the past. Not anymore.

The Advent of Secret Tribunals

Nowadays, overseas companies, or the wealthy individuals who own them, are able to litigate against governments for the laws they pass, at offshore tribunals made up of corporate lawyers. The cases take place in secret. In contrast to domestic courts, these tribunals allow no avenue for appeal or judicial review. Ordinary citizens are unable to file a case to them, nor can our government, or even businesses operating from this country. The door is open exclusively to entities registered abroad.

If a tribunal finds that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, potentially billions.

These awards are based not on real financial harm but funds the tribunal officials conclude the company would perhaps have made. The administration might be compelled to abandon its policy. It becomes discouraged from enacting future policies of a similar nature, for fear of being sued.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being brought, as firms learn from each other, and investment funds finance suits in exchange for a share of the takings. The outcome? National sovereignty and democratic governance are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the choices made by elected bodies is that this stipulation has been incorporated – absent public approval, and frequently under conditions of extreme secrecy – inside trade treaties.

A Real-World Example: The Whitehaven Coalmine

Twelve months ago, activists secured a significant win at the senior court. The presiding officer found that proposals to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had agreed to the extraordinary assertion that the mine could have zero effect on national carbon targets. The incoming administration then withdrew the consent the former government had issued. Currently, this success is under threat by an offshore tribunal accountable to no one but the companies filing the suit.

In August, a corporate entity whose ultimate owners reside in the Cayman Islands lodged a claim challenging the UK government. Recently a tribunal in the United States was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the money it could have earned 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 challenging the state? An elected representative, and ex-law officer in the outgoing administration, the noted patriot Geoffrey Cox. The state enacts a policy, the domestic court supports it, then a foreign company challenges it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

The Russian Challenge

On the same day that the panel on the coalmine case was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. We know scarce of the case at present, but it appears probable that he will utilise the arbitration process to fight the restrictions the UK levied against him following the Russian aggression. He has started suing another European state on these grounds, seeking a colossal sum: an amount representing half nation's annual revenue. Among the lawyers acting for him in that case? a prominent lawyer, married to the ex-UK leader.

Trade specialists argue that the EU’s hesitation in leveraging immobilised Russian assets as security for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over democratic administrations could be blocking the money Ukraine desperately needs.

Empty Promises and Mounting Costs

We were assured that these events wouldn’t happen. In 2014, a senior politician, championing the most significant and hazardous of all investment pacts, declared: “We’ve signed trade deal after trade deal and there has never been a problem in the past.” An adviser on this matter accused campaigners of “scaremongering … the truth is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that exclusively weaker states had to worry about such legal actions. Warnings that “when companies begin to understand the power they’ve been granted, they will turn their attention from the weak nations to the strong ones” were dismissed with scepticism.

That threat has now materialised. Recently, energy and mining firms have lodged a unprecedented number of claims against nations rich and poor, contesting – as in the case of the Cumbrian coalmine – government attempts to stop environmental catastrophe. Companies have to date won $114bn by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP