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How do you perceive our system of government operates? Maybe along the lines of this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills become law. The law are enforced by the courts. End of story. Yet, that’s how it once functioned. Those days are over.

The Emergence of Secret Tribunals

Today, overseas companies, and the billionaires that control them, can sue elected administrations for the policies they pass, at offshore tribunals staffed by commercial attorneys. These proceedings are conducted behind closed doors. Differing from national judiciaries, these tribunals grant no avenue for appeal or judicial review. You or I are unable to file a case to them, just as our government, or even enterprises operating from this country. They are open solely for corporations operating from foreign soil.

When a secret court finds that a law or policy may compromise the corporation’s expected profits, it has the power to grant financial penalties of hundreds of millions, running into billions.

These sums constitute not real financial harm but money the arbitrators decide the company would perhaps have made. The government might be compelled to rescind the measure. It is deterred from enacting future policies in that area, for fear of being sued.

A Mechanism Running Rampant

Record numbers of legal actions are being filed, as corporations take cues from each other, and investment funds fund legal actions in exchange for a cut of the settlements. The result? National sovereignty and democracy are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the choices enacted by legislatures is that this provision has been inserted – without public consent, and frequently under a climate of extreme secrecy – inside bilateral investment treaties.

A Specific Example: The Whitehaven Coalmine

Last year, a conservation group won a great victory at the senior court. The judge determined that schemes to open the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had endorsed the bizarre claim that the mine would have no impact on climate commitments. The Labour government subsequently revoked the licence the Tories had issued. Now, this legal outcome faces being overturned by an secret arbitration panel reporting to only the corporations filing the suit.

During August, a corporate entity whose beneficial owners are located in the tax haven 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 suing the UK for the revenue it might have made if the mine had been allowed to proceed. Citizens have little idea how much this might be. Which individual is representing it challenging the British government? A sitting MP, and ex-law officer in the outgoing administration, the noted patriot Geoffrey Cox. The government enacts a policy, the high court upholds it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the mining lawsuit was convened, it was revealed from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are nothing of the case to date, but it appears probable that he will utilise the tribunal to fight the sanctions the UK enacted against him after the Russian aggression. He has already filed a claim against Luxembourg with similar intent, demanding sixteen billion dollars: equivalent to half of state's yearly income. Included in the counsel acting for him in that case? the wife of a former prime minister, wife of the previous PM.

Legal experts believe that the EU’s hesitation in using frozen state funds as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This extraordinary, undemocratic power over sovereign states may be obstructing the finance Ukraine urgently requires.

Empty Promises and Growing Threats

We were assured that such things could not occur. Previously, a senior politician, advocating for the most significant and hazardous of all investment pacts, declared: “Britain has agreed to trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this issue labelled critics of “exaggeration … the fact is, ISDS barely touches the UK much”. The general impression seemed to be that solely developing countries had to worry about ISDS claims. Cautionary notes that “once firms grasp the authority bestowed upon them, they will redirect their efforts from the poorer states to the strong ones” were greeted by widespread derision.

That prediction is now a reality. Recently, energy and resource corporations have initiated a record number of cases against nations rich and poor, opposing – like the example of the Whitehaven project – official measures to prevent climate breakdown. Firms have so far won vast sums through ISDS, of which fossil fuel companies have obtained $84bn. That represents the combined GDP