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What is your perceive our political system operates? Maybe along the lines of this. Citizens choose MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Legislation is maintained by the courts. Simple as that. However, that used to be how it once functioned. No longer.

The Emergence of Secret Courts

Nowadays, overseas companies, and the oligarchs behind them, are able to litigate against nation states for the policies they pass, at private courts staffed by business advocates. The cases are conducted behind closed doors. Differing from national judiciaries, these panels grant no opportunity to appeal or legal review. The general public cannot take a case to them, nor can our government, or even enterprises based in this country. They are open solely for corporations based overseas.

Should an arbitration panel determines that a legislative action might diminish the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions of pounds, running into billions.

This compensation represent not tangible damages but funds the panel members determine the company could potentially have made. The administration might be compelled to abandon its policy. It is discouraged from enacting future policies in that area, due to the risk of incurring a lawsuit.

A Mechanism Growing Exponentially

Unprecedented levels of disputes are being initiated, as corporations take cues from each other, and investment funds fund legal actions for a share of a portion of the settlements. The consequence? National sovereignty and popular rule are turning into prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the choices made by elected bodies is that this clause has been written – absent public approval, and typically amid conditions of profound opacity – into bilateral investment treaties.

A Concrete Case: The Whitehaven Coalmine

A year ago, activists secured a significant win at the high court. The judge found that proposals to open the first new deep coal mine in the UK for three decades, in northwest England, were illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine could have zero effect on national carbon targets. The Labour government then withdrew the consent the Tories had issued. Now, this victory could be compromised by an offshore tribunal answering to only the companies filing the suit.

In August, a corporate entity whose beneficial owners reside in the tax haven initiated proceedings against the UK government. Last week a tribunal in Washington DC was set up to adjudicate on it.

This firm is suing the UK for the profits it could have earned if the mine had been allowed to go ahead. The public has little idea how much this might be. Who is serving as its counsel in opposition to the UK administration? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the domestic court validates it, then a foreign company disputes it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

The Russian Challenge

Simultaneously that the tribunal on the coal mine dispute was appointed, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are nothing of the case to date, but it seems likely that he will utilise the tribunal to fight the penalties the UK imposed on him subsequent to the invasion of Ukraine. He has started suing a small nation on these grounds, claiming a colossal sum: equivalent to half of government’s yearly budget. Included in the counsel acting for him in that case? Cherie Blair, wife of the previous PM.

Trade specialists contend that the EU’s delay in utilising seized oligarchs' funds as collateral for its loan to Ukraine arises from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This unprecedented, secretive influence over elected governments may be obstructing the money Ukraine urgently requires.

False Assurances and Growing Risks

We were assured that these scenarios were not possible. In 2014, a former prime minister, championing the most significant and hazardous of all these agreements, told us: “The UK has signed trade agreement after trade deal and we have never seen a case in the past.” An expert on this topic labelled activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries should be concerned by such legal actions. Predictions that “once firms begin to understand the power they’ve been granted, they will turn their attention from the poorer states to the wealthy nations” were greeted by widespread derision.

That warning is now a reality. In the current period, oil and gas and extraction companies have initiated a historic level of claims against nations both wealthy and developing, contesting – as in the case of the Cumbrian coalmine – official measures to halt climate breakdown. Firms have so far won $114bn by using ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP