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What is your perceive our political system functions? It could be something like this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills pass into law. The law is upheld by the courts. That's it. Well, that used to be how it used to work. Not anymore.

The Advent of Secret Courts

Nowadays, international firms, and the wealthy individuals who own them, can sue governments for the policies they pass, at secret arbitration panels made up of commercial attorneys. The cases take place behind closed doors. Differing from national judiciaries, these tribunals provide no avenue for appeal or legal review. Ordinary citizens are unable to file a case to them, just as our government, or even businesses headquartered in this country. The door is open exclusively to entities registered abroad.

When a secret court determines that a legislative action could harm the corporation’s expected profits, it can award damages of hundreds of millions of pounds, potentially billions.

This compensation represent not real financial harm but compensation the arbitrators determine the company could potentially have made. The administration may have to rescind the measure. It will be hesitant to passing future laws in that area, worried about facing litigation.

A Process Running Rampant

Record numbers of disputes are being brought, as corporations learn from each other, and investment funds fund legal actions in return for a portion of the takings. The outcome? Democratic sovereignty and popular rule are becoming prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The reason it is permitted to trump national legislation and the rulings enacted by elected bodies is that this provision has been written – absent public approval, and typically amid an atmosphere of total confidentiality – inside trade treaties.

A Real-World Instance: The UK Coalmine

Twelve months ago, a conservation group won a great victory at the High Court. The judge ruled that proposals to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had accepted the bizarre claim that the mine could have zero effect on our carbon budgets. The new government subsequently revoked the permission the Tories had approved. Today, this success is under threat by an secret arbitration panel answering to no one but the corporations petitioning it.

During August, a firm whose ultimate owners reside in the Cayman Islands lodged a claim against the UK government. Recently a dispute settlement body in the US capital was established to hear it.

This firm is suing the UK for the revenue it might have made if the mine had been permitted to commence operations. The public has little idea how much this sum represents. What legal team is representing it against the British government? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The state makes a decision, the high court upholds it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

The Russian Challenge

On the same day that the court on the coal mine dispute was established, information emerged 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 at present, but it seems likely that he may employ the ISDS mechanism to contest the restrictions the UK levied against him following the Russian aggression. He has already filed a claim against another European state on these grounds, demanding $16bn: an amount representing half nation's yearly income. Part of the counsel representing him there? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s procrastination in leveraging immobilised state funds as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments may be obstructing the finance Ukraine urgently requires.

Misleading Claims and Escalating Risks

We were assured that these events could not occur. Previously, a senior politician, championing the biggest and most dangerous of all these agreements, declared: “Britain has agreed to trade deal after trade deal and there has not been a issue in the past.” An adviser on this issue described critics of “exaggeration … the fact is, ISDS has little impact on the UK much”. The overall message was crafted to be that exclusively weaker states needed to fear such legal actions. Predictions that “as corporations grasp the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the developed economies” were met with general mockery.

That warning has come to pass. This year, oil and gas and resource corporations have filed a historic level of cases against nations across the economic spectrum, challenging – similar to the Whitehaven project – government attempts to stop climate breakdown. Corporations have thus far won vast sums by using ISDS, of which oil majors have obtained $84bn. That is equivalent to the combined GDP