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What is your perceive our political system works? Perhaps something like this. We elect MPs. They legislate on bills. If a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. End of story. Yet, that was how it used to work. Not anymore.

The Advent of Secret Courts

In the modern era, overseas companies, or the wealthy individuals behind them, are able to litigate against elected administrations for the laws they pass, at private courts composed of corporate lawyers. Such disputes take place behind closed doors. Unlike our courts, these tribunals grant no avenue for appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even businesses based in this country. Access is granted only to entities registered abroad.

If a tribunal rules that a law or policy could harm the corporation’s projected profits, it has the power to grant compensation of vast sums, running into billions.

These awards constitute not tangible damages but money the tribunal officials conclude the company might otherwise have made. The state may have to rescind the measure. It will be discouraged from introducing similar legislation in that area, due to the risk of being sued.

A Process Spiralling Out of Control

Historically high figures of disputes are being filed, as corporations learn from each other, and private equity bankroll lawsuits in exchange for a portion of the takings. The consequence? National sovereignty and popular rule are becoming too costly.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the decisions made by legislatures is that this clause has been inserted – without democratic mandate, and frequently under an atmosphere of total confidentiality – into international trade agreements.

A Concrete Case: The Whitehaven Coalmine

A year ago, a conservation group achieved a major legal triumph at the High Court. The justice found that schemes to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have had no impact on climate commitments. The Labour government then withdrew the licence the previous administration had granted. Currently, this success could be compromised by an foreign court reporting to exclusively the companies petitioning it.

During August, a firm whose beneficial owners are based in the Cayman Islands lodged a claim against the UK government. The previous week a tribunal in the United States was set up to hear it.

The claimant is litigating against the UK for the profits it would have generated if the mine had received permission to go ahead. We have no idea how much this might be. What legal team is acting on its behalf against the UK administration? A sitting MP, and ex-law officer in the previous government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a overseas corporation challenges it through an secretive private court, and a sitting MP works for its behalf.

A Sanctions Challenge

Concurrently that the court on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are little of the case so far, but it appears probable that he’ll use the tribunal to fight the sanctions the UK imposed on him following the war in Ukraine. He has already started suing Luxembourg for this reason, demanding sixteen billion dollars: equivalent to half of government’s yearly budget. Included in the lawyers acting for him in that case? Cherie Blair, wife of the previous PM.

Legal experts contend that the EU’s delay in using frozen state funds as security for its financial support package stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, unaccountable authority over elected governments could be blocking the funds Ukraine critically depends on.

Empty Promises and Escalating Risks

We were assured that these events were not possible. In 2014, a senior politician, championing the largest and riskiest of all such treaties, declared: “The UK has signed investment treaty after trade deal and there has never been a problem in the past.” A consultant on this topic labelled campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that solely developing countries needed to fear these lawsuits. Predictions that “when companies start to realise the authority bestowed upon them, they will shift their focus from the poorer states to the developed economies” were dismissed with scepticism.

That warning is now a reality. Recently, energy and extraction companies have lodged a historic level of cases against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – government attempts to halt climate breakdown. Companies have to date won vast sums through ISDS, of which oil majors have been awarded eighty-four billion dollars. That equates to the combined GDP