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What is your understand our system of government operates? Maybe along the lines of this. We elect MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Statutes is maintained by the courts. That's it. However, that used to be how it operated in the past. No longer.

The Rise of Secret Courts

Nowadays, overseas companies, and the billionaires that control them, are able to litigate against nation states for the laws they pass, at offshore tribunals composed of business advocates. Such disputes are conducted in secret. In contrast to domestic courts, these panels allow no right of appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises based in this country. They are open only to businesses based overseas.

If a tribunal rules that a legislative action might diminish the corporation’s expected profits, it may order financial penalties of hundreds of millions, even billions.

These sums are based not on actual losses but funds the panel members conclude the company might otherwise have made. The state may have to abandon its policy. It becomes discouraged from introducing similar legislation in that area, worried about facing litigation.

A System Growing Exponentially

Unprecedented levels of legal actions are being initiated, as firms learn from each other, and hedge funds bankroll lawsuits for a share of a portion of the awards. The result? Democratic sovereignty and popular rule are turning into unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it can supersede domestic law and the decisions taken by elected bodies is that this stipulation has been written – without democratic mandate, and frequently under an atmosphere of extreme secrecy – inside international trade agreements.

A Concrete Instance: The Whitehaven Coal Mine

Last year, environmental campaigners secured a significant win at the senior court. The justice ruled that proposals to dig the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were illegally sanctioned by the previous government, which had accepted the questionable argument that the mine would have had zero effect on national carbon targets. The Labour government subsequently revoked the licence the Tories had issued. Now, this success could be compromised by an foreign court reporting to only the corporations petitioning it.

In August, a corporate entity whose beneficial owners are based in the tax haven initiated proceedings versus the UK government. Last week a arbitration panel in Washington DC was established to consider the case.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to proceed. We have no clear indication how much this might be. Which individual is serving as its counsel in opposition to the state? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a international entity disputes it through an undemocratic offshore tribunal, and a elected official works for its behalf.

A Sanctions Case

Concurrently that the panel on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. Details are little of the case at present, but it seems likely that he may employ the arbitration process to fight the restrictions the UK enacted against him subsequent to the invasion of Ukraine. He has initiated proceedings against a small nation for this reason, seeking a colossal sum: half that state's yearly income. Part of the counsel acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

Legal experts argue that the EU’s hesitation in utilising seized oligarchs' funds as security for its loan to Ukraine is due to 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 democratic administrations might be preventing the funds Ukraine desperately needs.

Misleading Claims and Mounting Threats

We were assured that these events wouldn’t happen. Previously, a senior politician, championing the most significant and hazardous of all such treaties, told us: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” An expert on this topic accused critics of “exaggeration … in reality, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries should be concerned by these lawsuits. Warnings that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were dismissed with scepticism.

That prediction has come to pass. Recently, fossil fuel and extraction companies have initiated a record number of claims against nations both wealthy and developing, opposing – as in the case of the UK mine – official measures to halt environmental catastrophe. Companies have so far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained the majority. That equates to the combined GDP