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How do you reckon our system of government operates? Maybe along the lines of this. The public votes for MPs. They legislate on bills. If a majority is secured, the bills are enacted as law. The law are enforced by the courts. Simple as that. Well, that used to be how it used to work. Not anymore.

The Rise of Secret Courts

Nowadays, foreign corporations, or the oligarchs who own them, can sue governments for the policies they pass, at offshore tribunals made up of commercial attorneys. These proceedings are conducted behind closed doors. Differing from national judiciaries, these tribunals allow no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even companies based in this country. They are open exclusively to corporations operating from foreign soil.

If a tribunal rules that a law or policy might diminish the corporation’s projected profits, it has the power to grant damages of hundreds of millions, running into billions.

This compensation represent not tangible damages but money the tribunal officials determine the company could potentially have made. The administration could be forced to abandon its policy. It will be deterred from enacting future policies of a similar nature, worried about facing litigation.

A Process Running Rampant

Record numbers of legal actions are being filed, as corporations learn from each other, and investment funds fund legal actions in return for a cut of the settlements. The consequence? Democratic sovereignty and popular rule are becoming too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the choices enacted by parliaments is that this clause has been incorporated – absent public approval, and often in an atmosphere of total confidentiality – into international trade agreements.

A Real-World Instance: The Cumbrian Coalmine

Last year, activists achieved a major legal triumph at the High Court. The judge ruled that proposals to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the outgoing administration, which had agreed to the extraordinary assertion that the mine could have no impact on climate commitments. The new government subsequently revoked the consent the former government had granted. Now, this victory could be compromised by an secret arbitration panel reporting to no one but the corporations filing the suit.

During August, a corporate entity whose beneficial owners reside in the offshore financial centre lodged a claim against the UK government. Recently a arbitration panel in the United States was established to adjudicate on it.

This firm is litigating against the UK for the profits it might have made if the mine had been allowed to commence operations. Citizens have little idea how much this might be. What legal team is acting on its behalf challenging the British government? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The government passes a law, the high court validates it, then a international entity challenges it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

The Russian Challenge

On the same day that the panel on the coalmine case was appointed, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case so far, but it appears probable that he will utilise the ISDS mechanism to fight the penalties the UK enacted against him after the invasion of Ukraine. He has already started suing Luxembourg for this reason, claiming a colossal sum: half that state's yearly income. Among the lawyers on his side? Cherie Blair, married to the previous PM.

International law scholars believe that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its financial support package arises from apprehension in Brussels that it could be sued in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over elected governments might be preventing the money Ukraine desperately needs.

Misleading Claims and Mounting Threats

The public was told that these events wouldn’t happen. Years ago, a former prime minister, championing the most significant and hazardous of all such treaties, stated: “The UK has signed investment treaty after trade deal and there has not been a case in the past.” An adviser on this issue accused campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations had to worry about such legal actions. Cautionary notes that “once firms begin to understand the influence they now possess, they will turn their attention from the vulnerable countries to the strong ones” were met with scepticism.

That warning is now a reality. Recently, energy and resource corporations have initiated a unprecedented number of claims against nations rich and poor, challenging – similar to the Whitehaven project – government attempts to stop environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained eighty-four billion dollars. That is equivalent to the combined GDP