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How do you understand our system of government operates? It could be similar to this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills become law. The law is maintained by the courts. That's it. However, that was how it used to work. No longer.

The Rise of Secret Courts

Today, international firms, along with the oligarchs that control them, can sue governments for the policies they pass, at offshore tribunals composed of business advocates. These proceedings are held in secret. Unlike our courts, these tribunals allow no right of appeal or legal review. You or I cannot take a case to them, nor can our government, or even businesses operating from this country. The door is open exclusively to entities operating from foreign soil.

When a secret court determines that a legislative action might diminish the corporation’s anticipated profits, it can award compensation of hundreds of millions of pounds, potentially billions.

These sums constitute not actual losses but money the panel members decide the company might otherwise have made. The administration might be compelled to drop the legislation. It becomes deterred from enacting future policies in that area, due to the risk of facing litigation.

A Process Growing Exponentially

Unprecedented levels of legal actions are being brought, as corporations take cues from each other, and private equity bankroll lawsuits in exchange for a cut of the settlements. The outcome? Democratic sovereignty and democracy are turning into too costly.

The system is called “investor-state dispute settlement” (ISDS). The reason it can trump domestic law and the decisions taken by parliaments is that this clause has been written – without democratic mandate, and typically amid a climate of profound opacity – inside bilateral investment treaties.

A Concrete Example: The UK Coalmine

Last year, activists secured a significant win at the senior court. The judge determined that schemes to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had no consequence on climate commitments. The new government then withdrew the licence the former government had issued. Now, this success is under threat by an secret arbitration panel reporting to exclusively the entities petitioning it.

In August, a firm whose ultimate owners reside in the tax haven filed a lawsuit challenging the UK government. The previous week a dispute settlement body in the United States was set up to consider the case.

The claimant is suing the UK for the profits it would have generated if the mine had received permission to commence operations. We have little idea how much this sum represents. Who is serving as its counsel against the British government? An elected representative, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a foreign company contests it through an unaccountable arbitration panel, and a elected official acts on its behalf.

The Russian Lawsuit

Concurrently that the panel on the mining lawsuit was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. Details are little of the case to date, but it appears probable that he’ll use the ISDS mechanism to contest the sanctions the UK imposed on him following the Russian aggression. He has filed a claim against another European state on these grounds, seeking a colossal sum: equivalent to half of government’s annual revenue. Included in the legal team on his side? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists contend that the EU’s delay in utilising seized state funds as guarantee for its financial support package is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, secretive influence over sovereign states may be obstructing the funds Ukraine critically depends on.

Empty Promises and Escalating Risks

The public was told that these scenarios could not occur. Previously, a former prime minister, championing the biggest and most dangerous of all these agreements, declared: “The UK has signed investment treaty upon trade deal and there has not been a problem in the past.” An adviser on this matter described campaigners of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states should be concerned by these lawsuits. Predictions that “as corporations begin to understand the influence they now possess, they will shift their focus from the poorer states to the wealthy nations” were greeted by scepticism.

That warning has now materialised. Recently, fossil fuel and mining firms have filed a record number of suits against nations across the economic spectrum, opposing – like the example of the Whitehaven project – government attempts to stop environmental catastrophe. Companies have so far won $114bn through ISDS, of which oil majors have been awarded $84bn. That represents the combined GDP