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Can you perceive our system of government works? Maybe something like this. Citizens choose MPs. They vote on bills. Should a majority is achieved, the bills become law. Legislation are enforced by the courts. End of story. However, that used to be how it used to work. Not anymore.

The Advent of Secret Tribunals

Today, international firms, or the billionaires that control them, are able to litigate against elected administrations for the laws they pass, at private courts composed of commercial attorneys. The cases are held behind closed doors. In contrast to domestic courts, these tribunals allow no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, just as our government, or even enterprises headquartered in this country. They are open solely for businesses registered abroad.

Should an arbitration panel determines that a law or policy might diminish the corporation’s expected profits, it has the power to grant damages of hundreds of millions, potentially billions.

This compensation constitute not tangible damages but money the arbitrators conclude the company could potentially have made. The state might be compelled to abandon its policy. It is deterred from enacting future policies along the same lines, due to the risk of incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of cases are being initiated, as corporations learn from each other, and hedge funds fund legal actions in return for a cut of the awards. The result? National sovereignty and democratic governance are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede domestic law and the rulings made by legislatures is that this stipulation has been incorporated – without democratic mandate, and typically amid an atmosphere of profound opacity – into international trade agreements.

A Real-World Example: The Whitehaven Coalmine

Last year, environmental campaigners secured a significant win at the high court. The presiding officer found that proposals to excavate the first new deep coal mine in the UK for three decades, in northwest England, had been illegally sanctioned by the outgoing administration, which had agreed to the bizarre claim that the mine would have had zero effect on national carbon targets. The new government subsequently revoked the licence the former government had granted. Now, this success faces being overturned by an offshore tribunal reporting to only the corporations filing the suit.

Last August, a firm whose beneficial owners are based in the Cayman Islands filed a lawsuit against the UK government. Recently a dispute settlement body in Washington DC was convened to adjudicate on it.

The company is seeking compensation from the UK for the revenue it might have made if the mine had been allowed to proceed. We have no clear indication how much this might be. What legal team is serving as its counsel challenging the state? A sitting MP, and previous senior legal advisor in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state makes a decision, the high court upholds it, then a overseas corporation contests it through an secretive arbitration panel, and a member of our parliament represents its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the mining lawsuit was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. Details are little of the case at present, but it appears probable that he’ll use the arbitration process to challenge the sanctions the UK imposed on him after the Russian aggression. He has already started suing Luxembourg on these grounds, seeking a colossal sum: an amount representing half nation's yearly budget. Part of the legal team representing him there? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s hesitation in leveraging immobilised state funds as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This unprecedented, undemocratic power over elected governments may be obstructing the funds Ukraine desperately needs.

False Assurances and Escalating Costs

The public was told that these events could not occur. Previously, a senior politician, advocating for the largest and riskiest of all such treaties, declared: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” An adviser on this issue described campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that only poorer nations should be concerned by these lawsuits. Warnings that “once firms start to realise the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were greeted by general mockery.

That threat is now a reality. Recently, fossil fuel and extraction companies have filed a record number of claims against nations both wealthy and developing, opposing – similar to the Whitehaven project – state efforts to halt environmental catastrophe. Firms have so far won $114bn by using ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP