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What is your understand our political system operates? Perhaps along the lines of this. Citizens choose MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. That's it. Yet, that used to be how it once functioned. No longer.

The Rise of Secret Tribunals

Nowadays, overseas companies, along with the wealthy individuals that control them, are able to litigate against governments for the laws they pass, at offshore tribunals staffed by commercial attorneys. The cases are held behind closed doors. Differing from national judiciaries, these bodies grant no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies operating from this country. They are open exclusively to entities operating from foreign soil.

Should an arbitration panel rules that a legislative action may compromise the corporation’s expected profits, it can award compensation of hundreds of millions of pounds, potentially billions.

These sums represent not actual losses but money the panel members determine the company could potentially have made. The government may have to abandon its policy. It is deterred from enacting future policies in that area, worried about incurring a lawsuit.

A Process Growing Exponentially

Unprecedented levels of disputes are being brought, as companies learn from each other, and investment funds bankroll lawsuits in exchange for a cut of the takings. The consequence? Democratic sovereignty and popular rule are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the choices taken by legislatures is that this provision has been incorporated – absent public approval, and often in an atmosphere of extreme secrecy – within international trade agreements.

A Real-World Example: The Cumbrian Coal Mine

Twelve months ago, activists achieved a major legal triumph at the high court. The justice determined that proposals to open the first deep coalmine in the UK for three decades, in northwest England, were illegally sanctioned by the Conservative government, which had accepted the bizarre claim that the mine would have had no consequence on our carbon budgets. The new government then withdrew the licence the Tories had granted. Currently, this success faces being overturned by an offshore tribunal reporting to only the entities filing the suit.

In August, a firm whose final controllers are located in the tax haven initiated proceedings versus the UK government. Recently a dispute settlement body in Washington DC was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it might have made if the mine had been allowed to go ahead. The public has no idea how much this might be. What legal team is serving as its counsel in opposition to the British government? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot Geoffrey Cox. The government enacts a policy, the national judiciary upholds it, then a overseas corporation disputes it through an secretive offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Case

On the same day that the tribunal on the mining lawsuit was established, it was revealed from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case to date, but it is highly possible that he’ll use the tribunal to challenge the sanctions the UK levied against him following the war in Ukraine. He has previously started suing Luxembourg with similar intent, claiming $16bn: an amount representing half government’s yearly income. Part of the lawyers representing him there? Cherie Blair, married to the ex-UK leader.

Legal experts believe that the EU’s hesitation in utilising seized state funds as security for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, unaccountable authority over democratic administrations might be preventing the money Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these scenarios could not occur. In 2014, a former prime minister, advocating for the biggest and most dangerous of all such treaties, told us: “The UK has signed investment treaty upon trade deal and we have never seen a issue in the past.” An adviser on this issue described campaigners of “scaremongering … in reality, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that only poorer nations should be concerned by such legal actions. Predictions that “once firms start to realise the influence they’ve been granted, they will turn their attention from the vulnerable countries to the developed economies” were dismissed with general mockery.

That threat is now a reality. This year, energy and mining firms have lodged a unprecedented number of cases against nations across the economic spectrum, contesting – similar to the UK mine – official measures to prevent environmental catastrophe. Firms have so far won vast sums via ISDS, of which oil majors have secured $84bn. That represents the combined GDP