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How do you understand our political system operates? Perhaps 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. Simple as that. Well, that’s how it once functioned. Not anymore.

The Rise of Secret Courts

In the modern era, foreign corporations, and the wealthy individuals behind them, have the power to sue governments for the policies they pass, at private courts composed of commercial attorneys. These proceedings are conducted away from public scrutiny. Differing from national judiciaries, these bodies grant no right of appeal or legal review. The general public cannot take a case to them, and neither can our government, including companies operating from this country. Access is granted solely for businesses operating from foreign soil.

When a secret court finds that a law or policy could harm the corporation’s projected profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums represent not actual losses but funds the arbitrators conclude the company could potentially have made. The state might be compelled to rescind the measure. It is deterred from introducing similar legislation of a similar nature, due to the risk of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Record numbers of cases are being brought, as companies observe each other, and private equity finance suits in return for a cut of the takings. The outcome? Democratic sovereignty and democratic governance are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the decisions taken by parliaments is that this provision has been written – without public consent, and typically amid an atmosphere of total confidentiality – within bilateral investment treaties.

A Specific Example: The UK Coalmine

A year ago, environmental campaigners achieved a major legal triumph at the high court. The justice found that schemes to open the first deep coalmine in the UK for a generation, in northwest England, were unlawfully approved by the Conservative government, which had endorsed the extraordinary assertion that the mine would have no consequence on national carbon targets. The Labour government subsequently revoked the licence the Tories had granted. Now, this victory faces being overturned by an offshore tribunal answering to only the corporations filing the suit.

Last August, a corporate entity whose final controllers are based in the offshore financial centre lodged a claim versus the UK government. The previous week a tribunal in Washington DC was established to adjudicate on it.

The claimant is litigating against the UK for the profits it could have earned if the mine had been allowed to commence operations. Citizens have little idea how much this sum represents. What legal team is acting on its behalf challenging the British government? A sitting MP, and previous senior legal advisor in the previous government, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the national judiciary validates it, then a international entity contests it through an secretive offshore tribunal, and a elected official represents its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the coalmine case was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. We know nothing of the case so far, but it appears probable that he will utilise the arbitration process to fight the penalties the UK enacted against him subsequent to the Russian aggression. He has initiated proceedings against Luxembourg for this reason, seeking sixteen billion dollars: an amount representing half nation's yearly budget. Included in the legal team acting for him in that case? the wife of a former prime minister, married to the ex-UK leader.

Legal experts believe that the EU’s hesitation in using frozen oligarchs' funds as security for its financial support package arises from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This remarkable, secretive influence over sovereign states could be blocking the finance Ukraine urgently requires.

Misleading Claims and Growing Threats

The public was told that these scenarios were not possible. Previously, a government leader, promoting the biggest and most dangerous of all investment pacts, told us: “We’ve signed investment treaty upon trade deal and there has not been a case in the past.” A consultant on this topic described critics of “alarmism … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries needed to fear such legal actions. Predictions that “when companies start to realise the power bestowed upon them, they will shift their focus from the weak nations to the strong ones” were dismissed with scepticism.

That warning has come to pass. This year, fossil fuel and mining firms have filed a historic level of claims against nations across the economic spectrum, contesting – like the example of the Whitehaven project – government attempts to stop climate breakdown. Firms have to date won $114bn by using ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP