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Can you reckon our system of government operates? It could be along the lines of this. The public votes for MPs. They legislate on bills. When a majority is obtained, the bills become law. Statutes is maintained by the courts. That's it. Yet, that’s how it operated in the past. Not anymore.

The Emergence of Secret Courts

In the modern era, overseas companies, along with the wealthy individuals who own them, have the power to sue governments for the laws they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings are conducted away from public scrutiny. Differing from national judiciaries, these panels grant no avenue for appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, or even companies based in this country. Access is granted only to businesses operating from foreign soil.

When a secret court rules that a government measure might diminish the corporation’s expected profits, it has the power to grant financial penalties of hundreds of millions, potentially billions.

These sums represent not actual losses but compensation the tribunal officials conclude the company could potentially have made. The administration might be compelled to drop the legislation. It becomes discouraged from introducing similar legislation of a similar nature, worried about facing litigation.

A Mechanism Running Rampant

Record numbers of legal actions are being initiated, as firms observe each other, and hedge funds finance suits in return for a cut of the settlements. The outcome? Democratic sovereignty and popular rule are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump a country's own laws and the decisions made by parliaments is that this stipulation has been inserted – without democratic mandate, and often in an atmosphere of total confidentiality – into trade treaties.

A Concrete Example: The Cumbrian Coalmine

Last year, a conservation group won a great victory at the High Court. The presiding officer determined that plans to excavate the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine could have zero effect on our carbon budgets. The new government later cancelled the licence the Tories had issued. Today, this legal outcome could be compromised by an secret arbitration panel answering to exclusively the entities bringing the case.

In August, a firm whose final controllers are located in the tax haven initiated proceedings versus the UK government. Last week a tribunal in the US capital was convened to adjudicate on it.

The company is litigating against the UK for the money it could have earned if the mine had been permitted to commence operations. The public has no clear indication how much this might be. What legal team is representing it in opposition to the British government? A member of parliament, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the high court supports it, then a overseas corporation contests it through an secretive private court, and a member of our parliament works for its behalf.

The Russian Challenge

Simultaneously that the tribunal on the coalmine case was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case so far, but it appears probable that he may employ the tribunal to fight the sanctions the UK levied against him following the war in Ukraine. He has already initiated proceedings against a small nation for this reason, demanding a colossal sum: half that government’s yearly income. Among the lawyers on his side? Cherie Blair, married to the ex-UK leader.

Legal experts contend that the EU’s delay in using frozen state funds as collateral for its loan to Ukraine is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This remarkable, unaccountable authority over sovereign states might be preventing the money Ukraine urgently requires.

False Assurances and Mounting Costs

Politicians promised that such things wouldn’t happen. Years ago, a former prime minister, advocating for the most significant and hazardous of all such treaties, told us: “The UK has signed trade deal after trade deal and there has not been a problem in the past.” An adviser on this topic labelled critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were greeted by general mockery.

That prediction has come to pass. This year, energy and extraction companies have filed a record number of cases against nations across the economic spectrum, contesting – similar to the Whitehaven project – government attempts to halt environmental catastrophe. Corporations have so far won vast sums by using ISDS, of which energy giants have been awarded the majority. That equates to the combined GDP