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What is your understand our political system works? Maybe along the lines of this. We elect MPs. They debate and pass bills. When a majority is secured, the bills are enacted as law. The law are enforced by the courts. Simple as that. Well, that used to be how it used to work. No longer.

The Advent of Secret Courts

In the modern era, international firms, and the oligarchs that control them, can sue elected administrations for the policies they pass, at private courts made up of business advocates. Such disputes are conducted away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or oversight by judges. The general public cannot take a case to them, just as our government, or even enterprises operating from this country. Access is granted only to corporations operating from foreign soil.

Should an arbitration panel determines 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 awards constitute not actual losses but compensation the tribunal officials decide the company would perhaps have made. The state might be compelled to abandon its policy. It will be hesitant to passing future laws along the same lines, for fear of being sued.

A System Spiralling Out of Control

Historically high figures of disputes are being filed, as companies take cues from each other, and investment funds fund legal actions in return for a share of the awards. The consequence? Democratic sovereignty and popular rule are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the decisions made by elected bodies is that this clause has been incorporated – without democratic mandate, and frequently under conditions of extreme secrecy – within international trade agreements.

A Specific Example: The Whitehaven Coal Mine

Twelve months ago, a conservation group secured a significant win at the High Court. The justice found that proposals to excavate the first major coal mine in the UK for three decades, in northwest England, had been wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine would have no consequence on our carbon budgets. The new government subsequently revoked the licence the former government had approved. Now, this victory faces being overturned by an secret arbitration panel answering to exclusively the entities filing the suit.

In August, a company whose beneficial owners are based in the Cayman Islands initiated proceedings against the UK government. The previous week a tribunal in Washington DC was convened to consider the case.

The claimant is seeking compensation from the UK for the revenue it would have generated if the mine had received permission to proceed. The public has little idea how much this sum represents. Who is acting on its behalf challenging the British government? An elected representative, and former attorney-general in the previous government, that great patriot Sir Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a international entity disputes it through an secretive offshore tribunal, and a elected official acts on its behalf.

A Sanctions Challenge

Simultaneously that the court on the coal mine dispute was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are scarce of the case at present, but it seems likely that he will utilise the tribunal to contest the sanctions the UK imposed on him following the invasion of Ukraine. He has initiated proceedings against a small nation with similar intent, seeking a colossal sum: an amount representing half government’s yearly income. Among the legal team acting for him in that case? Cherie Blair, spouse of the previous PM.

International law scholars contend that the EU’s delay in using frozen state funds as guarantee for its loan to Ukraine stems from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states might be preventing the finance Ukraine urgently requires.

False Assurances and Growing Risks

The public was told that these scenarios were not possible. Years ago, a government leader, promoting the biggest and most dangerous of all such treaties, stated: “Britain has agreed to trade deal after trade deal and we have never seen a problem in the past.” An expert on this topic described critics of “alarmism … the truth is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that exclusively weaker states needed to fear 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 dismissed with general mockery.

That prediction is now a reality. This year, oil and gas and extraction companies have lodged a record number of cases against nations both wealthy and developing, opposing – similar to the Whitehaven project – official measures to halt climate breakdown. Firms have so far won vast sums through ISDS, of which oil majors have secured $84bn. That equates to the combined GDP