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What is your reckon our political system works? It could be similar to this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills pass into law. The law are enforced by the courts. That's it. However, that used to be how it once functioned. Those days are over.

The Rise of Secret Courts

Today, foreign corporations, along with the wealthy individuals behind them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels staffed by commercial attorneys. The cases are held in secret. Differing from national judiciaries, these tribunals allow no right of appeal or legal review. You or I cannot take a case to them, and neither can our government, including companies based in this country. Access is granted exclusively to businesses based overseas.

Should an arbitration panel finds that a legislative action might diminish the corporation’s expected profits, it may order financial penalties of vast sums, running into billions.

These awards constitute not real financial harm but funds the panel members determine the company could potentially have made. The government might be compelled to abandon its policy. It becomes discouraged from enacting future policies of a similar nature, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Unprecedented levels of cases are being initiated, as firms learn from each other, and investment funds finance suits in return for a cut of the settlements. The outcome? Sovereignty and popular rule are turning into prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the decisions enacted by elected bodies is that this stipulation has been incorporated – absent public approval, and typically amid a climate of total confidentiality – within trade treaties.

A Concrete Case: The Whitehaven Coalmine

A year ago, activists won a great victory at the senior court. The judge found that plans to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had agreed to the bizarre claim that the mine could have zero effect on climate commitments. The new government then withdrew the licence the previous administration had granted. Now, this legal outcome could be compromised by an secret arbitration panel accountable to exclusively the corporations bringing the case.

Last August, a firm whose beneficial owners are based in the tax haven initiated proceedings versus the UK government. Recently a arbitration panel in the US capital was convened to hear it.

The claimant is litigating against the UK for the profits it might have made if the mine had received permission to commence operations. The public has no clear indication how much this could amount to. Which individual is serving as its counsel in opposition to the British government? An elected representative, and ex-law officer in the outgoing administration, the self-proclaimed patriot the MP. The state passes a law, the domestic court supports it, then a foreign company challenges it through an secretive offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Case

Simultaneously that the tribunal on the coalmine case was appointed, information emerged from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are little of the case so far, but it seems likely that he may employ the tribunal to fight the restrictions the UK enacted against him subsequent to the Russian aggression. He has already initiated proceedings against another European state on these grounds, seeking $16bn: half that government’s annual revenue. Part of the counsel acting for him in that case? the wife of a former prime minister, wife of the previous PM.

Trade specialists contend that the EU’s delay in using frozen state funds as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be sued in the offshore corporate courts, under a investment pact. This remarkable, secretive influence over sovereign states could be blocking the money Ukraine desperately needs.

Misleading Claims and Mounting Costs

We were assured that these events wouldn’t happen. Previously, a former prime minister, promoting the biggest and most dangerous of all such treaties, stated: “We’ve signed trade agreement after trade deal and there has not been a issue in the past.” An adviser on this matter accused activists of “alarmism … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states had to worry about such legal actions. Predictions that “when companies grasp the authority they’ve been granted, they will shift their focus from the poorer states to the developed economies” were met with widespread derision.

That threat has come to pass. This year, fossil fuel and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, challenging – as in the case of the Whitehaven project – state efforts to stop environmental catastrophe. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have been awarded the majority. That is equivalent to the combined GDP