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Can you reckon our system of government operates? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. Legislation is maintained by the courts. Simple as that. Yet, that’s how it used to work. No longer.

The Emergence of Secret Courts

Today, international firms, or the billionaires who own them, have the power to sue nation states for the policies they pass, at offshore tribunals staffed by commercial attorneys. Such disputes are held away from public scrutiny. Unlike our courts, these bodies allow no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, just as our government, including companies headquartered in this country. Access is granted exclusively to corporations based overseas.

Should an arbitration panel rules that a government measure could harm the corporation’s anticipated profits, it may order financial penalties of hundreds of millions of pounds, running into billions.

These sums represent not tangible damages but money the tribunal officials determine the company would perhaps have made. The state might be compelled to drop the legislation. It becomes deterred from passing future laws in that area, for fear of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being filed, as companies observe each other, and investment funds finance suits for a share of a portion of the settlements. The outcome? Democratic sovereignty and democracy are turning into prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump a country's own laws and the decisions taken by elected bodies is that this provision has been incorporated – absent public approval, and typically amid a climate of profound opacity – into trade treaties.

A Real-World Case: The Whitehaven Coal Mine

Twelve months ago, activists won a great victory at the senior court. The justice found that plans to dig the first deep coalmine in the UK for a generation, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine could have no consequence on climate commitments. The Labour government later cancelled the consent the former government had issued. Currently, this legal outcome is under threat by an offshore tribunal accountable to only the corporations filing the suit.

In August, a corporate entity whose final controllers are based in the Cayman Islands initiated proceedings against the UK government. The previous week a arbitration panel in Washington DC was established to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had received permission to commence operations. The public has no clear indication how much this could amount to. Which individual is acting on its behalf in opposition to the UK administration? A sitting MP, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The state enacts a policy, the national judiciary validates it, then a overseas corporation disputes it through an secretive arbitration panel, and a sitting MP works for its behalf.

A Sanctions Challenge

Simultaneously that the court on the coal mine dispute was appointed, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case so far, but it appears probable that he’ll use the ISDS mechanism to fight the restrictions the UK enacted against him following the Russian aggression. He has already filed a claim against a small nation on these grounds, seeking sixteen billion dollars: an amount representing half nation's annual revenue. Among the lawyers acting for him in that case? a prominent lawyer, wife of the previous PM.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as guarantee for its loan to Ukraine is due to concerns within Belgium that it could be taken to court in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over elected governments might be preventing the funds Ukraine critically depends on.

Misleading Claims and Mounting Threats

We were assured that these events were not possible. Years ago, a senior politician, advocating for the most significant and hazardous of all such treaties, stated: “We’ve signed trade deal after trade deal and there has not been a problem in the past.” A consultant on this matter described campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that solely developing countries needed to fear such legal actions. Predictions that “once firms grasp the authority they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were met with widespread derision.

That threat has now materialised. This year, energy and mining firms have initiated a historic level of claims against nations across the economic spectrum, challenging – as in the case of the Cumbrian coalmine – government attempts to halt global warming. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That equates to the combined GDP