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What is your perceive our system of government works? Maybe along the lines of this. We elect MPs. They vote on bills. Should a majority is secured, the bills pass into law. The law is maintained by the courts. Simple as that. Yet, that used to be how it used to work. No longer.

The Rise of Secret Courts

Nowadays, overseas companies, 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 conducted in secret. Differing from national judiciaries, these tribunals grant no avenue for appeal or judicial review. Ordinary citizens cannot take a case to them, just as our government, including businesses operating from this country. They are open solely for businesses based overseas.

When a secret court finds that a government measure might diminish the corporation’s anticipated profits, it may order financial penalties of vast sums, even billions.

This compensation are based not on real financial harm but compensation the tribunal officials conclude the company could potentially have made. The government may have to abandon its policy. It becomes discouraged from enacting future policies along the same lines, for fear of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being initiated, as companies observe each other, and investment funds bankroll lawsuits in return for a cut of the awards. The result? National sovereignty and popular rule are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it can trump national legislation and the rulings taken by parliaments is that this stipulation has been inserted – without democratic mandate, and often in conditions of total confidentiality – inside trade treaties.

A Specific Instance: The UK Coalmine

Twelve months ago, a conservation group won a great victory at the high court. The presiding officer found that plans to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine would have had no impact on climate commitments. The Labour government later cancelled the licence the Tories had issued. Now, this victory faces being overturned by an foreign court reporting to no one but the companies filing the suit.

In August, a company whose beneficial owners are based in the offshore financial centre initiated proceedings challenging the UK government. Last week a arbitration panel in the US capital was convened to hear it.

This firm is suing the UK for the profits it would have generated if the mine had been allowed to go ahead. We have no clear indication how much this could amount to. What legal team is serving as its counsel against the British government? A sitting MP, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The government passes a law, the high court validates it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a member of our parliament works for its behalf.

A Sanctions Challenge

Simultaneously that the court on the coal mine dispute was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows scarce of the case to date, but it appears probable that he’ll use the arbitration process to contest the sanctions the UK levied against him following the invasion of Ukraine. He has started suing Luxembourg for this reason, demanding sixteen billion dollars: an amount representing half government’s annual revenue. Among the lawyers acting for him in that case? Cherie Blair, married to the former British prime minister.

International law scholars argue that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine is due to Belgium’s fear that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, undemocratic power over democratic administrations might be preventing the money Ukraine critically depends on.

Misleading Claims and Mounting Threats

The public was told that these events wouldn’t happen. In 2014, a government leader, championing the largest and riskiest of all such treaties, stated: “The UK has signed investment treaty after trade deal and there has never been a problem in the past.” An adviser on this issue accused activists of “scaremongering … in reality, ISDS barely touches the UK much”. The overall message was crafted to be that exclusively weaker states needed to fear these lawsuits. Cautionary notes that “when companies begin to understand the power they now possess, they will turn their attention from the poorer states to the developed economies” were greeted by general mockery.

That prediction has now materialised. This year, energy and mining firms have filed a record number of claims against nations across the economic spectrum, challenging – similar to the Whitehaven project – state efforts to halt climate breakdown. Corporations have so far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have been awarded $84bn. That equates to the combined GDP