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Can you understand our political system works? Maybe something like this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. That's it. Yet, that was how it operated in the past. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, or the billionaires behind them, can sue elected administrations for the policies they pass, at private courts composed of commercial attorneys. The cases are conducted in secret. Differing from national judiciaries, these bodies allow no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even businesses based in this country. Access is granted exclusively to businesses based overseas.

If a tribunal determines that a law or policy might diminish the corporation’s anticipated profits, it can award compensation of vast sums, running into billions.

These sums represent not tangible damages but compensation the arbitrators decide the company could potentially have made. The state may have to abandon its policy. It is discouraged from passing future laws of a similar nature, worried about being sued.

A Mechanism Running Rampant

Record numbers of disputes are being filed, as firms observe each other, and private equity finance suits in exchange for a portion of the settlements. The consequence? National sovereignty and democratic governance are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede national legislation and the rulings taken by parliaments is that this clause has been inserted – without public consent, and typically amid an atmosphere of total confidentiality – into bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer determined that proposals to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have had no impact on national carbon targets. The Labour government subsequently revoked the licence the former government had approved. Now, this victory could be compromised by an foreign court accountable to no one but the corporations filing the suit.

Last August, a corporate entity whose beneficial owners are located in the tax haven filed a lawsuit versus the UK government. Recently a dispute settlement body in Washington DC was set up to adjudicate on it.

This firm is suing the UK for the revenue it could have earned if the mine had been allowed to go ahead. Citizens have no idea how much this might be. What legal team is representing it in opposition to the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the high court supports it, then a foreign company challenges it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

The Russian Case

On the same day that the panel on the mining lawsuit was appointed, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. The public knows nothing of the case at present, but it is highly possible that he may employ the arbitration process to challenge the restrictions the UK imposed on him after the invasion of Ukraine. He has initiated proceedings against a small nation for this reason, demanding sixteen billion dollars: half that state's yearly income. Among the counsel on his side? Cherie Blair, married to the previous PM.

International law scholars believe that the EU’s procrastination in leveraging immobilised state funds as security for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, unaccountable authority over democratic administrations could be blocking the money Ukraine desperately needs.

Empty Promises and Mounting Threats

The public was told that these events were not possible. In 2014, a government leader, promoting the largest and riskiest of all these agreements, declared: “Britain has agreed to trade deal after trade deal and we have never seen a problem in the past.” A consultant on this issue described campaigners of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative seemed to be that solely developing countries needed to fear these lawsuits. Warnings that “when companies start to realise the power they now possess, they will redirect their efforts from the weak nations to the developed economies” were dismissed with general mockery.

That warning has now materialised. This year, oil and gas and extraction companies have initiated a historic level of suits against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – state efforts to stop environmental catastrophe. Corporations have to date won $114bn through ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP