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What is your reckon our political system works? Maybe something like this. Citizens choose MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. However, that’s how it operated in the past. Not anymore.

The Advent of Secret Courts

In the modern era, foreign corporations, along with the billionaires that control them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels staffed by commercial attorneys. The cases take place away from public scrutiny. In contrast to domestic courts, these panels allow no right of appeal or oversight by judges. You or I are unable to file a case to them, and neither can our government, or even businesses based in this country. They are open solely for entities registered abroad.

If a tribunal determines that a government measure may compromise the corporation’s anticipated profits, it can award compensation of vast sums, running into billions.

This compensation constitute not real financial harm but money the tribunal officials determine the company would perhaps have made. The state could be forced to abandon its policy. It will be discouraged from passing future laws along the same lines, worried about being sued.

A Process Growing Exponentially

Historically high figures of legal actions are being filed, as firms learn from each other, and private equity fund legal actions for a share of a share of the awards. The consequence? Democratic sovereignty and democracy are turning into prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede a country's own laws and the choices made by legislatures is that this clause has been written – without democratic mandate, and frequently under a climate of total confidentiality – within trade treaties.

A Real-World Instance: The Whitehaven Coal Mine

A year ago, activists achieved a major legal triumph at the High Court. The judge found that plans to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have no consequence on climate commitments. The Labour government then withdrew the consent the Tories had approved. Now, this success could be compromised by an secret arbitration panel answering to only the corporations filing the suit.

During August, a firm whose beneficial owners are based in the offshore financial centre filed a lawsuit challenging the UK government. Recently a arbitration panel in the US capital was established to adjudicate on it.

The company is suing the UK for the revenue it would have generated if the mine had been permitted to commence operations. We have little idea how much this sum represents. Who is serving as its counsel challenging the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, the noted patriot the MP. The administration enacts a policy, the domestic court validates it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a sitting MP acts on its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the coal mine dispute was established, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are little of the case at present, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK imposed on him after the war in Ukraine. He has initiated proceedings against another European state on these grounds, seeking a colossal sum: an amount representing half state's yearly budget. Included in the legal team on his side? Cherie Blair, wife of the former British prime minister.

Legal experts believe that the EU’s procrastination in leveraging immobilised Russian assets as security for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over elected governments may be obstructing the money Ukraine urgently requires.

Empty Promises and Escalating Threats

The public was told that such things could not occur. In 2014, a government leader, advocating for the largest and riskiest of all investment pacts, told us: “We’ve signed investment treaty upon trade deal and we have never seen a problem in the past.” An expert on this matter labelled campaigners of “exaggeration … in reality, ISDS has little impact on the UK much”. The overall message appeared to be that exclusively weaker states had to worry about ISDS claims. Warnings that “as corporations grasp the authority bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were dismissed with widespread derision.

That threat has now materialised. This year, oil and gas and extraction companies have filed a historic level of claims against nations both wealthy and developing, contesting – similar to the Whitehaven project – government attempts to prevent global warming. Companies have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured $84bn. That equates to the combined GDP