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What is your understand our system of government works? Maybe similar to this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills pass into law. Statutes are enforced by the courts. That's it. Yet, that used to be how it used to work. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, or the oligarchs who own them, can sue elected administrations for the regulations they pass, at secret arbitration panels made up of corporate lawyers. These proceedings are conducted away from public scrutiny. Differing from national judiciaries, these tribunals allow no opportunity to appeal or judicial review. Ordinary citizens cannot take a case to them, just as our government, or even enterprises headquartered in this country. Access is granted exclusively to businesses operating from foreign soil.

When a secret court rules that a law or policy could harm the corporation’s anticipated profits, it may order financial penalties of vast sums, running into billions.

These awards are based not on tangible damages but funds the tribunal officials conclude the company might otherwise have made. The government could be forced to rescind the measure. It becomes deterred from introducing similar legislation along the same lines, worried about being sued.

A System Growing Exponentially

Historically high figures of cases are being initiated, as firms observe each other, and investment funds bankroll lawsuits in return for a cut of the awards. The consequence? Democratic sovereignty and democracy are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the rulings made by elected bodies is that this clause has been incorporated – without democratic mandate, and frequently under conditions of extreme secrecy – within trade treaties.

A Specific Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners won a great victory at the High Court. The judge found that proposals to dig the first deep coalmine in the UK for 30 years, in northwest England, had been wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have had no impact on national carbon targets. The incoming administration then withdrew the permission the Tories had issued. Today, this victory is under threat by an foreign court reporting to exclusively the companies filing the suit.

In August, a corporate entity whose final controllers reside in the offshore financial centre filed a lawsuit challenging the UK government. Recently a tribunal in the US capital was set up to adjudicate on it.

The company is suing the UK for the money it might have made if the mine had been permitted to commence operations. Citizens have no idea how much this might be. Which individual is serving as its counsel challenging the state? A member of parliament, and ex-law officer in the Conservative government, that great patriot Geoffrey Cox. The state passes a law, the high court supports it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

The Russian Lawsuit

On the same day that the court on the coal mine dispute was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are scarce of the case so far, but it is highly possible that he’ll use the arbitration process to contest the restrictions the UK imposed on him after the Russian aggression. He has initiated proceedings against Luxembourg with similar intent, claiming a colossal sum: an amount representing half state's yearly budget. Among the lawyers acting for him in that case? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts believe that the EU’s procrastination in leveraging immobilised oligarchs' funds as guarantee for its aid for 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, undemocratic power over democratic administrations could be blocking the finance Ukraine urgently requires.

Misleading Claims and Escalating Costs

Politicians promised that such things were not possible. Previously, a former prime minister, promoting the most significant and hazardous of all these agreements, told us: “We’ve signed trade deal upon trade deal and we have never seen a problem in the past.” An expert on this topic labelled activists of “alarmism … the fact is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations had to worry about such legal actions. Predictions that “as corporations start to realise the power they now possess, they will redirect their efforts from the poorer states to the developed economies” were met with widespread derision.

That threat has now materialised. This year, oil and gas and resource corporations have initiated a historic level of suits against nations rich and poor, opposing – similar to the Whitehaven project – official measures to stop environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which energy giants have secured $84bn. That represents the combined GDP