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Can you understand our system of government functions? Perhaps similar to this. Citizens choose MPs. They debate and pass bills. Should a majority is secured, the bills become law. Legislation is upheld by the courts. That's it. Well, that used to be how it operated in the past. No longer.

The Emergence of Secret Courts

Nowadays, foreign corporations, along with the oligarchs that control them, can sue nation states for the policies they pass, at private courts composed of corporate lawyers. The cases take place in secret. Unlike our courts, these panels allow no avenue for appeal or judicial review. The general public are unable to file a case to them, just as our government, or even companies headquartered in this country. Access is granted only to entities registered abroad.

If a tribunal determines that a government measure could harm the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, even billions.

These sums constitute not tangible damages but money the tribunal officials determine the company could potentially have made. The administration might be compelled to rescind the measure. It will be hesitant to introducing similar legislation along the same lines, due to the risk of incurring a lawsuit.

A System Growing Exponentially

Record numbers of cases are being initiated, as companies take cues from each other, and investment funds finance suits in exchange for a share of the takings. The outcome? Democratic sovereignty and democracy are now prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it can trump a country's own laws and the rulings made by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid a climate of total confidentiality – inside trade treaties.

A Specific Instance: The UK Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The presiding officer determined that plans to dig the first major coal mine in the UK for a generation, in northwest England, were found to be illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine could have no consequence on national carbon targets. The incoming administration subsequently revoked the licence the former government had approved. Now, this victory faces being overturned by an foreign court answering to exclusively the companies bringing the case.

In August, a corporate entity whose beneficial owners are based in the tax haven filed a lawsuit challenging the UK government. Recently a arbitration panel in Washington DC was established to adjudicate on it.

This firm is seeking compensation from the UK for the money it would have generated if the mine had received permission to go ahead. The public has little idea how much this might be. Which individual is acting on its behalf challenging the state? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot the MP. The state enacts a policy, the domestic court validates it, then a foreign company contests it through an undemocratic private court, and a member of our parliament represents its behalf.

A Sanctions Case

On the same day that the court on the coalmine case was appointed, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case so far, but it is highly possible that he will utilise the ISDS mechanism to fight the restrictions the UK imposed on him subsequent to the invasion of Ukraine. He has already started suing Luxembourg with similar intent, demanding a colossal sum: an amount representing half state's yearly budget. Among the lawyers representing him there? Cherie Blair, married to the ex-UK leader.

Legal experts argue that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its financial support package arises from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, secretive influence over democratic administrations could be blocking the finance Ukraine critically depends on.

Misleading Claims and Mounting Risks

We were assured that these events were not possible. Previously, a senior politician, promoting the biggest and most dangerous of all such treaties, declared: “Britain has agreed to investment treaty after trade deal and we have never seen a problem in the past.” An expert on this issue labelled activists of “scaremongering … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries had to worry about ISDS claims. Warnings that “once firms grasp the power they now possess, they will turn their attention from the vulnerable countries to the wealthy nations” were met with widespread derision.

That warning has come to pass. This year, oil and gas and resource corporations have filed a record number of claims against nations both wealthy and developing, challenging – similar to the Cumbrian coalmine – official measures to prevent environmental catastrophe. Companies have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained the majority. That is equivalent to the combined GDP