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What is your reckon our political system works? It could be similar to this. The public votes for MPs. They legislate on bills. If a majority is secured, the bills are enacted as law. The law is upheld by the courts. That's it. Yet, that was how it used to work. Not anymore.

The Rise of Secret Courts

In the modern era, international firms, or the billionaires behind them, have the power to sue nation states for the policies they pass, at secret arbitration panels staffed by business advocates. Such disputes are conducted behind closed doors. Unlike our courts, these tribunals allow no right of appeal or judicial review. The general public are unable to file a case to them, just as our government, including enterprises headquartered in this country. Access is granted exclusively to businesses operating from foreign soil.

If a tribunal rules that a legislative action could harm the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, potentially billions.

This compensation represent not real financial harm but money the tribunal officials determine the company would perhaps have made. The government might be compelled to drop the legislation. It is deterred from enacting future policies of a similar nature, worried about incurring a lawsuit.

A System Spiralling Out of Control

Unprecedented levels of cases are being initiated, as firms observe each other, and investment funds fund legal actions in exchange for a portion of the settlements. The result? Democratic sovereignty and democracy are now too costly.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the rulings taken by parliaments is that this clause has been written – without public consent, and typically amid an atmosphere of profound opacity – into bilateral investment treaties.

A Concrete Example: The Whitehaven Coal Mine

A year ago, a conservation group achieved a major legal triumph at the high court. The justice found that plans to excavate the first deep coalmine in the UK for a generation, in Cumbria, were wrongly permitted by the previous government, which had agreed to the extraordinary assertion that the mine would have no consequence on national carbon targets. The Labour government later cancelled the permission the Tories had approved. Now, this success is under threat by an offshore tribunal answering to exclusively the entities bringing the case.

During August, a corporate entity whose final controllers are based in the offshore financial centre lodged a claim against the UK government. Last week a tribunal in the United States was established to hear it.

This firm is seeking compensation from the UK for the profits it would have generated if the mine had received permission to commence operations. We have little idea how much this could amount to. What legal team is acting on its behalf challenging the British government? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot the MP. The administration passes a law, the national judiciary validates it, then a overseas corporation contests it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Case

Concurrently that the panel on the coalmine case was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows little of the case at present, but it seems likely that he’ll use the ISDS mechanism to contest the restrictions the UK imposed on him after the invasion of Ukraine. He has previously started suing Luxembourg for this reason, claiming sixteen billion dollars: equivalent to half of nation's annual revenue. Part of the lawyers on his side? Cherie Blair, spouse of the ex-UK leader.

Legal experts argue that the EU’s procrastination in leveraging immobilised state funds as security for its loan to Ukraine is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over elected governments might be preventing the finance Ukraine urgently requires.

Misleading Claims and Growing Threats

Politicians promised that these scenarios could not occur. In 2014, a former prime minister, championing the largest and riskiest of all investment pacts, stated: “Britain has agreed to trade agreement after trade deal and we have never seen a case in the past.” An expert on this matter accused activists of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states had to worry about ISDS claims. Predictions that “as corporations grasp the power they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with widespread derision.

That warning has come to pass. In the current period, oil and gas and mining firms have lodged a record number of cases against nations across the economic spectrum, contesting – like the example of the Whitehaven project – official measures to halt environmental catastrophe. Firms have so far won vast sums through ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP