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How do you reckon our political system operates? Perhaps along the lines of this. Citizens choose MPs. They vote on bills. When a majority is secured, the bills become law. Statutes is maintained by the courts. That's it. Well, that used to be how it used to work. No longer.

The Rise of Secret Courts

Nowadays, overseas companies, along with the billionaires who own them, have the power to sue governments for the laws they pass, at secret arbitration panels staffed by business advocates. The cases take place in secret. Differing from national judiciaries, these panels allow no right of appeal or oversight by judges. The general public are unable to file a case to them, just as our government, including enterprises headquartered in this country. The door is open only to businesses based overseas.

When a secret court determines that a law or policy might diminish the corporation’s expected profits, it may order financial penalties of hundreds of millions of pounds, running into billions.

These sums constitute not actual losses but compensation the tribunal officials determine the company would perhaps have made. The administration could be forced to drop the legislation. It will be hesitant to passing future laws in that area, worried about incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of cases are being filed, as companies observe each other, and investment funds fund legal actions in return for a cut of the takings. The consequence? National sovereignty and popular rule are turning into prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede a country's own laws and the choices taken by elected bodies is that this provision has been inserted – without democratic mandate, and typically amid a climate of extreme secrecy – into trade treaties.

A Real-World Instance: The Whitehaven Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer ruled that proposals to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had agreed to the bizarre claim that the mine would have no impact on our carbon budgets. The new government subsequently revoked the permission the previous administration had granted. Today, this legal outcome could be compromised by an foreign court accountable to only the entities filing the suit.

Last August, a corporate entity whose beneficial owners reside in the Cayman Islands filed a lawsuit versus the UK government. The previous week a tribunal in the United States was established to consider the case.

This firm is litigating against the UK for the money it would have generated if the mine had been allowed to proceed. The public has no idea how much this sum represents. Who is acting on its behalf challenging the state? An elected representative, and previous senior legal advisor in the previous government, the self-proclaimed patriot the MP. The state makes a decision, the high court upholds it, then a foreign company contests it through an unaccountable offshore tribunal, and a sitting MP works for its behalf.

A Sanctions Lawsuit

On the same day that the panel on the mining lawsuit was appointed, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows nothing of the case to date, but it appears probable that he may employ the arbitration process to contest the restrictions the UK imposed on him following the Russian aggression. He has previously started suing another European state on these grounds, seeking $16bn: half that government’s annual revenue. Among the lawyers acting for him in that case? Cherie Blair, spouse of the former British prime minister.

Trade specialists argue that the EU’s hesitation in using frozen Russian assets as collateral for its financial support package stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This extraordinary, secretive influence over democratic administrations might be preventing the finance Ukraine desperately needs.

Empty Promises and Growing Risks

We were assured that these events wouldn’t happen. Previously, a former prime minister, advocating for the largest and riskiest of all these agreements, told us: “The UK has signed investment treaty upon trade deal and we have never seen a problem in the past.” An adviser on this issue accused campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative seemed to be that exclusively weaker states should be concerned by such legal actions. Warnings that “once firms begin to understand the authority they now possess, they will turn their attention from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That threat has now materialised. This year, oil and gas and resource corporations have filed a record number of suits against nations across the economic spectrum, contesting – similar to the UK mine – government attempts to halt global warming. Companies have so far won $114bn by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That equates to the combined GDP