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How do you understand our political system works? Perhaps something like this. Citizens choose MPs. They legislate on bills. Should a majority is achieved, the bills become law. Statutes is upheld by the courts. Simple as that. Well, that was how it operated in the past. No longer.

The Rise of Secret Courts

Today, overseas companies, along with the billionaires behind them, can sue elected administrations for the regulations they pass, at secret arbitration panels made up of commercial attorneys. These proceedings are conducted away from public scrutiny. Unlike our courts, these bodies grant no right of appeal or oversight by judges. The general public cannot take a case to them, just as our government, or even companies operating from this country. They are open solely for entities registered abroad.

Should an arbitration panel finds that a government measure could harm the corporation’s anticipated profits, it may order compensation of hundreds of millions, even billions.

This compensation constitute not tangible damages but money the tribunal officials conclude the company could potentially have made. The state could be forced to rescind the measure. It becomes hesitant to introducing similar legislation of a similar nature, worried about incurring a lawsuit.

A System Growing Exponentially

Record numbers of disputes are being initiated, as firms observe each other, and private equity bankroll lawsuits in exchange for a share of the takings. The consequence? Democratic sovereignty and democracy are now too costly.

The process is called “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the rulings made by parliaments is that this clause has been written – without democratic mandate, and typically amid a climate of extreme secrecy – into trade treaties.

A Specific Example: The Cumbrian Coal Mine

Last year, a conservation group won a great victory at the high court. The presiding officer ruled that proposals to open the first major coal mine in the UK for three decades, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had endorsed the extraordinary assertion that the mine would have zero effect on climate commitments. The Labour government then withdrew the consent the previous administration had granted. Today, this victory faces being overturned by an foreign court reporting to exclusively the companies petitioning it.

During August, a corporate entity whose ultimate owners are based in the tax haven lodged a claim versus the UK government. Last week a tribunal in the United States was established to consider the case.

The company is seeking compensation from the UK for the profits it could have earned if the mine had been allowed to commence operations. We have no clear indication how much this could amount to. Which individual is acting on its behalf against the British government? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation disputes it through an secretive private court, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

Simultaneously that the tribunal on the coal mine dispute was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are nothing of the case at present, but it is highly possible that he will utilise the tribunal to fight the penalties the UK imposed on him subsequent to the war in Ukraine. He has already started suing a small nation for this reason, demanding sixteen billion dollars: an amount representing half nation's yearly budget. Part of the legal team acting for him in that case? a prominent lawyer, married to the previous PM.

International law scholars argue that the EU’s hesitation in leveraging immobilised state funds as guarantee for its financial support package is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This unprecedented, unaccountable authority over sovereign states might be preventing the finance Ukraine critically depends on.

False Assurances and Escalating Threats

The public was told that these scenarios were not possible. In 2014, a senior politician, championing the largest and riskiest of all such treaties, declared: “We’ve signed trade deal after trade deal and there has never been a problem in the past.” An adviser on this topic described campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries needed to fear ISDS claims. Cautionary notes that “once firms start to realise the influence they now possess, they will redirect their efforts from the vulnerable countries to the developed economies” were greeted by widespread derision.

That threat has now materialised. This year, fossil fuel and extraction companies have initiated a record number of cases against nations both wealthy and developing, opposing – similar to the Whitehaven project – government attempts to stop global warming. Companies have thus far won one hundred and fourteen billion dollars via ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP