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Can you understand our system of government works? Perhaps similar to this. Citizens choose MPs. They legislate on bills. Should a majority is obtained, the bills become law. The law is maintained by the courts. End of story. Well, that used to be how it used to work. No longer.

The Emergence of Secret Courts

In the modern era, international firms, along with the oligarchs that control them, can sue governments for the laws they pass, at private courts made up of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these panels allow no avenue for appeal or oversight by judges. The general public are unable to file a case to them, just as our government, or even businesses based in this country. The door is open solely for entities registered abroad.

When a secret court determines that a law or policy may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions, potentially billions.

These awards represent not real financial harm but funds the tribunal officials decide the company could potentially have made. The administration could be forced to abandon its policy. It will be discouraged from passing future laws of a similar nature, worried about incurring a lawsuit.

A System Running Rampant

Unprecedented levels of disputes are being filed, as corporations take cues from each other, and investment funds bankroll lawsuits in exchange for a cut of the awards. The outcome? Democratic sovereignty and democratic governance are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the rulings made by elected bodies is that this clause has been incorporated – without public consent, and frequently under conditions of extreme secrecy – within bilateral investment treaties.

A Real-World Case: The UK Coalmine

A year ago, a conservation group achieved a major legal triumph at the high court. The judge found that proposals to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were illegally sanctioned by the previous government, which had agreed to the extraordinary assertion that the mine would have zero effect on national carbon targets. The Labour government later cancelled the consent the Tories had issued. Today, this success faces being overturned by an foreign court answering to no one but the corporations filing the suit.

In August, a corporate entity whose beneficial owners reside in the offshore financial centre lodged a claim challenging the UK government. Last week a arbitration panel in the United States was established to adjudicate on it.

The company is suing the UK for the profits it would have generated if the mine had received permission to proceed. Citizens have no clear indication how much this could amount to. What legal team is representing it in opposition to the UK administration? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The government passes a law, the domestic court validates it, then a international entity challenges it through an undemocratic arbitration panel, and a sitting MP works for its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the mining lawsuit was appointed, information emerged from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case so far, but it is highly possible that he’ll use the tribunal to contest the sanctions the UK levied against him subsequent to the invasion of Ukraine. He has already initiated proceedings against another European state for this reason, seeking sixteen billion dollars: equivalent to half of state's yearly budget. Part of the legal team on his side? the wife of a former prime minister, spouse of the previous PM.

International law scholars contend that the EU’s delay in using frozen oligarchs' funds as guarantee for its loan to Ukraine is due to concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the funds Ukraine desperately needs.

False Assurances and Growing Risks

The public was told that these scenarios could not occur. Previously, a senior politician, championing the largest and riskiest of all these agreements, told us: “The UK has signed trade deal after trade deal and we have never seen a case in the past.” A consultant on this issue described activists of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that solely developing countries had to worry about such legal actions. Cautionary notes that “once firms grasp the power bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were greeted by scepticism.

That threat has come to pass. Recently, energy and mining firms have initiated a unprecedented number of claims against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – government attempts to halt climate breakdown. Firms have thus far won $114bn through ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP