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Can you perceive our system of government functions? It could be something like this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills become law. Statutes are enforced by the courts. Simple as that. Well, that’s how it used to work. Not anymore.

The Advent of Secret Courts

In the modern era, overseas companies, along with the oligarchs that control them, can sue elected administrations for the laws they pass, at offshore tribunals staffed by business advocates. Such disputes take place away from public scrutiny. In contrast to domestic courts, these tribunals allow no right of appeal or legal review. You or I are barred from bringing a case to them, and neither can our government, or even businesses based in this country. They are open exclusively to businesses registered abroad.

Should an arbitration panel determines that a legislative action might diminish the corporation’s anticipated profits, it may order damages of hundreds of millions, potentially billions.

These sums represent not tangible damages but compensation the panel members determine the company could potentially have made. The administration could be forced to drop the legislation. It becomes hesitant to introducing similar legislation in that area, worried about facing litigation.

A Process Spiralling Out of Control

Record numbers of disputes are being filed, as firms take cues from each other, and hedge funds finance suits in return for a share of the takings. The consequence? Sovereignty and democratic governance are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump a country's own laws and the rulings enacted by legislatures is that this provision has been incorporated – without democratic mandate, and typically amid a climate of profound opacity – within bilateral investment treaties.

A Concrete Instance: The UK Coal Mine

A year ago, a conservation group achieved a major legal triumph at the High Court. The judge determined that schemes to dig the first new deep coal mine in the UK for 30 years, in Cumbria, were found to be unlawfully approved by the previous government, which had endorsed the questionable argument that the mine would have no impact on national carbon targets. The incoming administration then withdrew the permission the previous administration had granted. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to only the companies filing the suit.

During August, a company whose final controllers are located in the Cayman Islands lodged a claim challenging the UK government. The previous week a dispute settlement body in the United States was set up to hear it.

The company is seeking compensation from the UK for the money it would have generated if the mine had been permitted to commence operations. We have little idea how much this might be. Who is representing it against the state? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The government enacts a policy, the high court validates it, then a international entity contests it through an unaccountable arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Challenge

Simultaneously that the tribunal on the coal mine dispute was established, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. Details are nothing of the case at present, but it seems likely that he’ll use the tribunal to challenge the restrictions the UK enacted against him subsequent to the Russian aggression. He has already initiated proceedings against another European state with similar intent, claiming sixteen billion dollars: equivalent to half of nation's yearly budget. Included in the counsel acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Legal experts believe that the EU’s hesitation in using frozen state funds as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, secretive influence over elected governments could be blocking the funds Ukraine desperately needs.

Empty Promises and Growing Threats

The public was told that such things wouldn’t happen. Previously, a former prime minister, advocating for the biggest and most dangerous of all these agreements, told us: “The UK has signed investment treaty after trade deal and there has never been a issue in the past.” An expert on this issue labelled activists of “exaggeration … the truth is, ISDS does not affect the UK much”. The prevailing narrative seemed to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “as corporations start to realise the authority they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were greeted by scepticism.

That threat has come to pass. This year, energy and resource corporations have filed a historic level of cases against nations across the economic spectrum, opposing – similar to the Whitehaven project – government attempts to halt global warming. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP