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How do you understand our political system operates? It could be along the lines of this. The public votes for MPs. They legislate on bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. Simple as that. Yet, that was how it operated in the past. Those days are over.

The Emergence of Secret Courts

Today, overseas companies, and the billionaires who own them, are able to litigate against elected administrations for the policies they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are held in secret. In contrast to domestic courts, these tribunals provide no avenue for appeal or judicial review. Ordinary citizens are barred from bringing a case to them, and neither can our government, including enterprises based in this country. They are open exclusively to entities operating from foreign soil.

Should an arbitration panel determines that a government measure might diminish the corporation’s anticipated profits, it can award damages of vast sums, running into billions.

These sums are based not on real financial harm but funds the tribunal officials conclude the company could potentially have made. The state might be compelled to rescind the measure. It becomes discouraged from passing future laws along the same lines, due to the risk of incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being brought, as firms take cues from each other, and investment funds finance suits in exchange for a share of the settlements. The result? Sovereignty and democracy are turning into too costly.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to override national legislation and the decisions enacted by legislatures is that this stipulation has been written – without public consent, and often in a climate of total confidentiality – inside trade treaties.

A Specific Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The justice found that plans to excavate the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine could have no impact on national carbon targets. The incoming administration then withdrew the permission the former government had issued. Currently, this legal outcome could be compromised by an foreign court reporting to only the companies bringing the case.

Last August, a firm whose beneficial owners reside in the offshore financial centre initiated proceedings challenging the UK government. The previous week a arbitration panel in the United States was convened to adjudicate on it.

This firm is suing the UK for the revenue it could have earned if the mine had received permission to commence operations. Citizens have no idea how much this could amount to. What legal team is representing it challenging the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The administration enacts a policy, the national judiciary validates it, then a international entity contests it through an unaccountable private court, and a member of our parliament represents its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coalmine case was established, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. Details are little of the case so far, but it is highly possible that he may employ the tribunal to contest the restrictions the UK levied against him following the Russian aggression. He has started suing another European state with similar intent, demanding sixteen billion dollars: an amount representing half state's annual revenue. Included in the lawyers on his side? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists contend that the EU’s hesitation in leveraging immobilised Russian assets as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations could be blocking the funds Ukraine urgently requires.

Empty Promises and Growing Costs

The public was told that such things could not occur. Previously, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, told us: “We’ve signed investment treaty upon trade deal and there has never been a issue in the past.” A consultant on this topic accused critics of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative seemed to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “as corporations grasp the authority they’ve been granted, they will shift their focus from the weak nations to the developed economies” were greeted by scepticism.

That threat has now materialised. Recently, fossil fuel and extraction companies have initiated a unprecedented number of claims against nations both wealthy and developing, contesting – like the example of the UK mine – official measures to prevent global warming. Firms have to date won vast sums through ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP