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Can you perceive our system of government works? It could be similar to this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills become law. Statutes is maintained by the courts. Simple as that. Yet, that was how it used to work. Those days are over.

The Emergence of Secret Courts

In the modern era, foreign corporations, or the oligarchs who own them, are able to litigate against governments for the regulations they pass, at offshore tribunals made up of corporate lawyers. The cases are held behind closed doors. In contrast to domestic courts, these tribunals provide no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, and neither can our government, or even companies headquartered in this country. They are open solely for entities operating from foreign soil.

If a tribunal finds that a law or policy might diminish the corporation’s expected profits, it may order financial penalties of hundreds of millions, running into billions.

These sums constitute not real financial harm but compensation the arbitrators decide the company might otherwise have made. The state might be compelled to rescind the measure. It is hesitant to passing future laws in that area, worried about being sued.

A Mechanism Growing Exponentially

Historically high figures of legal actions are being brought, as corporations observe each other, and investment funds bankroll lawsuits in exchange for a share of the settlements. The outcome? National sovereignty and popular rule are now prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the choices enacted by parliaments is that this clause has been inserted – without public consent, and typically amid a climate of total confidentiality – within international trade agreements.

A Concrete Case: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The judge ruled that proposals to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had endorsed the bizarre claim that the mine would have no consequence on our carbon budgets. The Labour government subsequently revoked the permission the Tories had approved. Currently, this success faces being overturned by an secret arbitration panel answering to only the entities bringing the case.

Last August, a firm whose ultimate owners reside in the offshore financial centre initiated proceedings against the UK government. Recently a tribunal in Washington DC was set up to consider the case.

The company is seeking compensation from the UK for the money it might have made if the mine had been allowed to proceed. Citizens have no clear indication how much this might be. What legal team is acting on its behalf against the state? An elected representative, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The government enacts a policy, the high court upholds it, then a foreign company disputes it through an undemocratic private court, and a member of our parliament represents its behalf.

An Oligarch's Case

Concurrently that the panel on the coalmine case was established, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are scarce of the case so far, but it is highly possible that he may employ the tribunal to challenge the restrictions the UK levied against him after the invasion of Ukraine. He has filed a claim against Luxembourg for this reason, claiming sixteen billion dollars: equivalent to half of nation's yearly budget. Part of the counsel representing him there? the wife of a former prime minister, married to the previous PM.

International law scholars contend that the EU’s hesitation in utilising seized 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 trade agreement. This remarkable, secretive influence over elected governments may be obstructing the funds Ukraine urgently requires.

Misleading Claims and Growing Costs

The public was told that these events were not possible. In 2014, a senior politician, advocating for the biggest and most dangerous of all investment pacts, told us: “The UK has signed trade deal upon trade deal and we have never seen a issue in the past.” An adviser on this topic accused critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states should be concerned by such legal actions. Cautionary notes that “once firms begin to understand the power bestowed upon them, they will shift their focus from the vulnerable countries to the developed economies” were met with general mockery.

That prediction is now a reality. This year, energy and resource corporations have filed a unprecedented number of claims against nations both wealthy and developing, challenging – like the example of the Whitehaven project – official measures to stop climate breakdown. Corporations have thus far won vast sums via ISDS, of which oil majors have secured the majority. That represents the combined GDP