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What is your reckon our system of government functions? Maybe similar to this. Citizens choose MPs. They vote on bills. When a majority is secured, the bills become law. The law is maintained by the courts. That's it. However, that used to be how it used to work. No longer.

The Advent of Secret Courts

In the modern era, foreign corporations, along with the oligarchs who own them, have the power to sue elected administrations for the laws they pass, at offshore tribunals made up of commercial attorneys. Such disputes are held behind closed doors. In contrast to domestic courts, these bodies provide no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, and neither can our government, including companies based in this country. Access is granted exclusively to businesses based overseas.

When a secret court determines that a legislative action could harm the corporation’s projected profits, it can award financial penalties of hundreds of millions, running into billions.

This compensation constitute not real financial harm but money the panel members determine the company could potentially have made. The administration could be forced to abandon its policy. It becomes discouraged from enacting future policies along the same lines, for fear of incurring a lawsuit.

A Mechanism Growing Exponentially

Historically high figures of disputes are being brought, as companies learn from each other, and private equity finance suits in return for a cut of the awards. The outcome? Sovereignty and democratic governance are now too costly.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can supersede national legislation and the decisions enacted by parliaments is that this provision has been incorporated – without public consent, and frequently under an atmosphere of extreme secrecy – inside international trade agreements.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The judge determined that plans to dig the first deep coalmine in the UK for a generation, in Cumbria, were illegally sanctioned by the Conservative government, which had accepted the bizarre claim that the mine would have zero effect on climate commitments. The Labour government subsequently revoked the permission the Tories had approved. Currently, this victory is under threat by an offshore tribunal reporting to only the corporations filing the suit.

In August, a company whose beneficial owners are based in the tax haven initiated proceedings challenging the UK government. Recently a dispute settlement body in the US capital was convened to consider the case.

This firm is suing the UK for the revenue it would have generated if the mine had been allowed to go ahead. The public has little idea how much this might be. Which individual is acting on its behalf in opposition to the state? A member of parliament, and former attorney-general in the previous government, the self-proclaimed patriot Geoffrey Cox. The government passes a law, the domestic court supports it, then a international entity challenges it through an secretive private court, and a member of our parliament works for its behalf.

An Oligarch's Case

Concurrently that the panel on the coal mine dispute was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. We know nothing of the case at present, but it is highly possible that he’ll use the tribunal to challenge the restrictions the UK levied against him following the Russian aggression. He has previously filed a claim against a small nation on these grounds, seeking a colossal sum: equivalent to half of nation's yearly income. Included in the lawyers representing him there? a prominent lawyer, spouse of the ex-UK leader.

Legal experts believe that the EU’s hesitation in utilising seized Russian assets as collateral for its loan to Ukraine is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over democratic administrations could be blocking the funds Ukraine critically depends on.

Empty Promises and Mounting Risks

We were assured that these scenarios could not occur. Previously, a government leader, promoting the largest and riskiest of all such treaties, told us: “We’ve signed investment treaty after trade deal and we have never seen a case in the past.” A consultant on this topic labelled activists of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “when companies grasp the authority bestowed upon them, they will redirect their efforts from the poorer states to the strong ones” were met with general mockery.

That prediction is now a reality. This year, energy and mining firms have initiated a historic level of cases against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – official measures to halt climate breakdown. Firms have thus far won vast sums by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP