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Can you understand our system of government works? Perhaps similar to this. Citizens choose MPs. They vote on bills. When a majority is achieved, the bills pass into law. Statutes are enforced by the courts. That's it. However, that used to be how it operated in the past. No longer.

The Advent of Secret Courts

Nowadays, overseas companies, and the wealthy individuals who own them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels made up of corporate lawyers. Such disputes take place away from public scrutiny. Differing from national judiciaries, these tribunals provide no opportunity to appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even enterprises operating from this country. The door is open exclusively to entities operating from foreign soil.

If a tribunal determines that a government measure could harm the corporation’s expected profits, it can award compensation of vast sums, potentially billions.

These sums represent not actual losses but compensation the tribunal officials determine the company could potentially have made. The government may have to rescind the measure. It becomes discouraged from enacting future policies in that area, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Unprecedented levels of legal actions are being initiated, as companies observe each other, and private equity bankroll lawsuits for a share of a portion of the awards. The consequence? National sovereignty and democracy are now too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can trump a country's own laws and the rulings made by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid conditions of extreme secrecy – within trade treaties.

A Concrete Example: The Cumbrian Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the High Court. The judge found that plans to open the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine could have zero effect on national carbon targets. The Labour government later cancelled the licence the former government had issued. Currently, this legal outcome faces being overturned by an foreign court answering to no one but the companies petitioning it.

In August, a firm whose beneficial owners are located in the offshore financial centre filed a lawsuit versus the UK government. The previous week a dispute settlement body in the US capital was convened to hear it.

This firm is suing the UK for the money it might have made if the mine had received permission to go ahead. Citizens have little idea how much this sum represents. Which individual is representing it challenging the UK administration? An elected representative, and former attorney-general in the previous government, the noted patriot the MP. The state passes a law, the high court validates it, then a overseas corporation disputes it through an secretive private court, and a elected official acts on its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coalmine case was established, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows nothing of the case at present, but it appears probable that he may employ the tribunal to fight the penalties the UK enacted against him subsequent to the war in Ukraine. He has initiated proceedings against a small nation with similar intent, claiming $16bn: half that government’s yearly income. Included in the legal team on his side? a prominent lawyer, married to the former British prime minister.

Legal experts believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its financial support package is due to apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, secretive influence over sovereign states might be preventing the funds Ukraine urgently requires.

Empty Promises and Escalating Threats

We were assured that these scenarios could not occur. In 2014, a government leader, championing the most significant and hazardous of all these agreements, stated: “We’ve signed investment treaty upon trade deal and we have never seen a issue in the past.” An expert on this matter described activists of “alarmism … the fact is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations needed to fear these lawsuits. Predictions that “as corporations start to realise the authority they’ve been granted, they will shift their focus from the weak nations to the developed economies” were dismissed with scepticism.

That warning is now a reality. In the current period, fossil fuel and extraction companies have filed a record number of claims against nations both wealthy and developing, challenging – similar to the UK mine – state efforts to stop environmental catastrophe. Corporations have so far won vast sums through ISDS, of which oil majors have been awarded $84bn. That is equivalent to the combined GDP