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What is your perceive our system of government operates? Perhaps something like this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills pass into law. Legislation are enforced by the courts. Simple as that. However, that was how it used to work. Those days are over.

The Rise of Secret Tribunals

Today, international firms, along with the oligarchs behind them, can sue nation states for the regulations they pass, at secret arbitration panels staffed by business advocates. Such disputes take place in secret. In contrast to domestic courts, these panels provide no right of appeal or legal review. Ordinary citizens are unable to file a case to them, just as our government, or even enterprises based in this country. The door is open only to businesses operating from foreign soil.

Should an arbitration panel determines that a government measure may compromise the corporation’s projected profits, it can award compensation of hundreds of millions of pounds, even billions.

These sums constitute not real financial harm but compensation the arbitrators decide the company might otherwise have made. The government might be compelled to abandon its policy. It becomes discouraged from introducing similar legislation in that area, worried about facing litigation.

A System Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as firms learn from each other, and private equity bankroll lawsuits in return for a share of the takings. The outcome? National sovereignty and democracy are turning into prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the decisions made by legislatures is that this stipulation has been written – without democratic mandate, and typically amid a climate of extreme secrecy – within bilateral investment treaties.

A Specific Instance: The Cumbrian Coalmine

A year ago, activists won a great victory at the senior court. The judge ruled that proposals to dig the first major coal mine in the UK for a generation, in northwest England, were found to be unlawfully approved by the outgoing administration, which had agreed to the bizarre claim that the mine would have zero effect on national carbon targets. The incoming administration then withdrew the permission the previous administration had granted. Today, this success is under threat by an foreign court reporting to no one but the companies bringing the case.

In August, a firm whose final controllers are located in the tax haven initiated proceedings challenging the UK government. Last week a dispute settlement body in Washington DC was set up to consider the case.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had received permission to commence operations. We have no clear indication how much this might be. Who is representing it in opposition to the UK administration? An elected representative, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the high court supports it, then a overseas corporation challenges it through an secretive arbitration panel, and a elected official works for its behalf.

The Russian Lawsuit

Simultaneously that the panel on the coal mine dispute was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows nothing of the case so far, but it seems likely that he’ll use the arbitration process to fight the penalties the UK levied against him following the Russian aggression. He has previously initiated proceedings against a small nation on these grounds, seeking a colossal sum: half that nation's annual revenue. Among the lawyers on his side? Cherie Blair, spouse of the previous PM.

International law scholars argue that the EU’s hesitation in using frozen oligarchs' funds as security for its financial support package stems 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 democratic administrations might be preventing the finance Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that these events were not possible. Previously, a former prime minister, promoting the biggest and most dangerous of all such treaties, told us: “The UK has signed trade agreement after trade deal and we have never seen a issue in the past.” A consultant on this matter labelled campaigners of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by ISDS claims. Predictions that “as corporations start to realise the influence they’ve been granted, they will shift their focus from the weak nations to the strong ones” were greeted by scepticism.

That warning has come to pass. This year, energy and mining firms have initiated a record number of claims against nations across the economic spectrum, contesting – like the example of the Whitehaven project – official measures to stop global warming. Companies have to date won $114bn by using ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP