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How do you perceive our political system functions? It could be something like this. The public votes for MPs. They legislate on bills. When a majority is achieved, the bills become law. Legislation is maintained by the courts. That's it. Well, that’s how it operated in the past. No longer.

The Emergence of Secret Courts

In the modern era, international firms, and the wealthy individuals who own them, are able to litigate against governments for the policies they pass, at offshore tribunals made up of business advocates. These proceedings are held in secret. Unlike our courts, these bodies provide no opportunity to appeal or judicial review. You or I cannot take a case to them, just as our government, including businesses headquartered in this country. They are open exclusively to entities based overseas.

When a secret court finds that a law or policy could harm the corporation’s anticipated profits, it may order damages of hundreds of millions of pounds, potentially billions.

This compensation represent not actual losses but money the panel members determine the company might otherwise have made. The administration might be compelled to rescind the measure. It becomes hesitant to passing future laws in that area, for fear of incurring a lawsuit.

A Process Growing Exponentially

Record numbers of disputes are being brought, as firms observe each other, and private equity fund legal actions in return for a share of the settlements. The outcome? Sovereignty and democratic governance are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the rulings made by legislatures is that this clause has been written – absent public approval, and often in a climate of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Whitehaven Coalmine

Last year, a conservation group won a great victory at the High Court. The justice ruled that plans to open the first deep coalmine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the previous government, which had agreed to the extraordinary assertion that the mine would have zero effect on national carbon targets. The Labour government subsequently revoked the permission the former government had approved. Now, this victory is under threat by an secret arbitration panel accountable to exclusively the entities filing the suit.

Last August, a firm whose ultimate owners are based in the Cayman Islands lodged a claim against the UK government. Recently a dispute settlement body in the United States was established to hear it.

The claimant is suing the UK for the revenue it could have earned if the mine had been allowed to proceed. We have no idea how much this could amount to. Who is acting on its behalf against the British government? An elected representative, and former attorney-general in the previous government, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the domestic court supports it, then a foreign company contests it through an unaccountable private court, and a elected official acts on its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the mining lawsuit was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are scarce of the case at present, but it appears probable that he’ll use the ISDS mechanism to contest the sanctions the UK enacted against him after the invasion of Ukraine. He has already started suing a small nation for this reason, claiming $16bn: an amount representing half state's yearly budget. Included in the lawyers acting for him in that case? Cherie Blair, married to the previous PM.

Legal experts contend that the EU’s hesitation in leveraging immobilised state funds as guarantee for its financial support package is due to Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states might be preventing the finance Ukraine critically depends on.

Misleading Claims and Growing Risks

We were assured that these events could not occur. Years ago, a government leader, promoting the most significant and hazardous of all such treaties, told us: “We’ve signed trade deal upon trade deal and there has not been a issue in the past.” An expert on this matter labelled activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that solely developing countries had to worry about ISDS claims. Warnings that “once firms begin to understand the authority they’ve been granted, they will shift their focus from the weak nations to the wealthy nations” were dismissed with scepticism.

That threat is now a reality. Recently, fossil fuel and resource corporations have lodged a record number of cases against nations across the economic spectrum, challenging – similar to the Whitehaven project – official measures to halt climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured eighty-four billion dollars. That equates to the combined GDP