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How do you reckon our system of government works? It could be along the lines of this. We elect MPs. They vote on bills. Should a majority is obtained, the bills become law. Statutes is upheld by the courts. That's it. Yet, that’s how it once functioned. No longer.

The Rise of Secret Courts

In the modern era, international firms, and the oligarchs behind them, can sue elected administrations for the policies they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings take place in secret. In contrast to domestic courts, these tribunals grant no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, or even businesses headquartered in this country. Access is granted solely for corporations registered abroad.

If a tribunal rules that a legislative action could harm the corporation’s expected profits, it can award compensation of hundreds of millions of pounds, potentially billions.

These sums are based not on real financial harm but funds the panel members decide the company would perhaps have made. The administration could be forced to abandon its policy. It will be deterred from passing future laws of a similar nature, for fear of incurring a lawsuit.

A System Spiralling Out of Control

Record numbers of legal actions are being filed, as firms observe each other, and private equity bankroll lawsuits for a share of a cut of the takings. The result? Democratic sovereignty and democracy are turning into unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the decisions made by parliaments is that this clause has been incorporated – absent public approval, and typically amid a climate of profound opacity – into trade treaties.

A Concrete Example: The UK Coal Mine

Last year, a conservation group secured a significant win at the senior court. The justice ruled that plans to open the first deep coalmine in the UK for 30 years, in northwest England, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine would have had no impact on national carbon targets. The Labour government subsequently revoked the consent the previous administration had issued. Now, this success faces being overturned by an offshore tribunal reporting to only the companies filing the suit.

Last August, a company whose final controllers reside in the Cayman Islands initiated proceedings challenging the UK government. Recently a dispute settlement body in the United States was convened to consider the case.

This firm is suing the UK for the money it might have made if the mine had been allowed to go ahead. The public has little idea how much this might be. Which individual is serving as its counsel against the British government? An elected representative, and previous senior legal advisor in the previous government, the noted patriot Geoffrey Cox. The administration makes a decision, the high court validates it, then a overseas corporation challenges it through an secretive arbitration panel, and a elected official works for its behalf.

The Russian Lawsuit

On the same day that the tribunal on the coal mine dispute was convened, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case so far, but it seems likely that he’ll use the ISDS mechanism to challenge the penalties the UK enacted against him subsequent to the war in Ukraine. He has already filed a claim against Luxembourg with similar intent, demanding a colossal sum: an amount representing half state's yearly income. Among the legal team acting for him in that case? Cherie Blair, wife of the former British prime minister.

International law scholars contend that the EU’s procrastination in leveraging immobilised state funds as security for its loan to Ukraine arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over sovereign states may be obstructing the money Ukraine critically depends on.

False Assurances and Escalating Costs

We were assured that such things could not occur. Years ago, a government leader, promoting the biggest and most dangerous of all such treaties, told us: “Britain has agreed to trade deal upon trade deal and there has never been a problem in the past.” An adviser on this topic accused campaigners of “scaremongering … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear ISDS claims. Predictions that “once firms begin to understand the power they now possess, they will shift their focus from the weak nations to the wealthy nations” were greeted by scepticism.

That warning has come to pass. Recently, energy and extraction companies have filed a historic level of claims against nations rich and poor, opposing – like the example of the Whitehaven project – government attempts to prevent environmental catastrophe. Companies have to date won $114bn by using ISDS, of which oil majors have been awarded $84bn. That equates to the combined GDP