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Can you understand our system of government operates? Perhaps something like this. The public votes for MPs. They debate and pass bills. If a majority is secured, the bills are enacted as law. The law is upheld by the courts. That's it. However, that’s how it used to work. Those days are over.

The Rise of Shadow Tribunals

In the modern era, international firms, and the billionaires that control them, can sue nation states for the policies they pass, at secret arbitration panels made up of commercial attorneys. These proceedings are held behind closed doors. Unlike our courts, these bodies provide no avenue for appeal or legal review. Ordinary citizens are barred from bringing a case to them, just as our government, including businesses headquartered in this country. They are open solely for entities registered abroad.

If a tribunal rules that a law or policy could harm the corporation’s anticipated profits, it may order financial penalties of vast sums, running into billions.

These awards constitute not tangible damages but funds the arbitrators determine the company would perhaps have made. The administration might be compelled to abandon its policy. It is discouraged from passing future laws in that area, worried about incurring a lawsuit.

A Mechanism Running Rampant

Unprecedented levels of disputes are being filed, as companies observe each other, and private equity finance suits for a share of a portion of the settlements. The result? Sovereignty and popular rule are now too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to override national legislation and the rulings taken by legislatures is that this provision has been inserted – without public consent, and often in an atmosphere of total confidentiality – inside trade treaties.

A Real-World Example: The UK Coal Mine

Twelve months ago, environmental campaigners won a great victory at the High Court. The justice ruled that plans to open the first major coal mine in the UK for three decades, in northwest England, were illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine could have no impact on national carbon targets. The Labour government subsequently revoked the consent the former government had approved. Now, this success faces being overturned by an offshore tribunal reporting to exclusively the companies filing the suit.

Last August, a firm whose ultimate owners are located in the tax haven filed a lawsuit versus the UK government. The previous week a arbitration panel in the US capital was convened to consider the case.

The company is suing the UK for the revenue it might have made if the mine had received permission to commence operations. We have no clear indication how much this could amount to. What legal team is representing it in opposition to the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state passes a law, the domestic court supports it, then a foreign company contests it through an undemocratic private court, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coal mine dispute was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case to date, but it seems likely that he’ll use the arbitration process to challenge the penalties the UK imposed on him subsequent to the war in Ukraine. He has already started suing another European state on these grounds, demanding sixteen billion dollars: equivalent to half of state's annual revenue. Part of the lawyers acting for him in that case? a prominent lawyer, spouse of the former British prime minister.

International law scholars argue that the EU’s delay in leveraging immobilised oligarchs' funds as guarantee for its financial support package arises from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, secretive influence over elected governments may be obstructing the money Ukraine critically depends on.

Empty Promises and Escalating Risks

We were assured that these scenarios wouldn’t happen. Years ago, a government leader, promoting the biggest and most dangerous of all these agreements, stated: “Britain has agreed to trade agreement after trade deal and we have never seen a problem in the past.” A consultant on this topic labelled critics of “alarmism … the fact is, ISDS barely touches the UK much”. The overall message appeared to be that only poorer nations should be concerned by these lawsuits. Warnings that “when companies begin to understand the power they now possess, they will shift their focus from the weak nations to the developed economies” were met with widespread derision.

That prediction is now a reality. In the current period, fossil fuel and extraction companies have initiated a historic level of cases against nations across the economic spectrum, challenging – similar to the Whitehaven project – official measures to prevent global warming. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured $84bn. That represents the combined GDP