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Can you reckon our political system functions? Maybe along the lines of this. Citizens choose MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Statutes is maintained by the courts. That's it. Yet, that’s how it once functioned. Those days are over.

The Advent of Secret Courts

In the modern era, overseas companies, along with the wealthy individuals who own them, have the power to sue nation states for the policies they pass, at private courts staffed by commercial attorneys. The cases take place away from public scrutiny. Unlike our courts, these panels provide no avenue for appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises operating from this country. They are open exclusively to corporations registered abroad.

When a secret court finds that a legislative action might diminish the corporation’s expected profits, it may order financial penalties of vast sums, potentially billions.

These awards represent not actual losses but compensation the arbitrators decide the company could potentially have made. The state may have to rescind the measure. It will be discouraged from passing future laws in that area, due to the risk of being sued.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being filed, as companies observe each other, and investment funds finance suits for a share of a share of the takings. The result? Sovereignty and democratic governance are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it can override national legislation and the decisions taken by parliaments is that this stipulation has been incorporated – without democratic mandate, and often in an atmosphere of extreme secrecy – within international trade agreements.

A Specific Instance: The UK Coal Mine

A year ago, a conservation group won a great victory at the senior court. The presiding officer found that plans to excavate the first major coal mine in the UK for three decades, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the bizarre claim that the mine would have no impact on national carbon targets. The new government then withdrew the consent the Tories had approved. Today, this success is under threat by an offshore tribunal reporting to exclusively the corporations petitioning it.

Last August, a corporate entity whose final controllers reside in the Cayman Islands filed a lawsuit against the UK government. The previous week a arbitration panel in the United States was established to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it could have earned if the mine had been allowed to proceed. We have little idea how much this sum represents. Who is representing it in opposition to the UK administration? An elected representative, and ex-law officer in the Conservative government, the noted patriot the MP. The government enacts a policy, the domestic court supports it, then a international entity contests it through an unaccountable private court, and a elected official acts on its behalf.

An Oligarch's Case

On the same day that the panel on the coalmine case was established, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know nothing of the case so far, but it appears probable that he will utilise the tribunal to fight the penalties the UK levied against him following the Russian aggression. He has filed a claim against another European state for this reason, seeking sixteen billion dollars: an amount representing half government’s annual revenue. Included in the legal team acting for him in that case? the wife of a former prime minister, married to the previous PM.

International law scholars believe that the EU’s procrastination in using frozen Russian assets as collateral for its financial support package is due to apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments could be blocking the funds Ukraine desperately needs.

Misleading Claims and Growing Threats

The public was told that such things were not possible. Years ago, a government leader, promoting the biggest and most dangerous of all such treaties, declared: “The UK has signed trade deal after trade deal and there has never been a issue in the past.” An adviser on this topic described critics of “scaremongering … the fact is, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries should be concerned by such legal actions. Cautionary notes that “when companies begin to understand the authority bestowed upon them, they will shift their focus from the vulnerable countries to the developed economies” were greeted by general mockery.

That prediction has now materialised. In the current period, fossil fuel and extraction companies have lodged a historic level of suits against nations across the economic spectrum, challenging – similar to the UK mine – official measures to stop climate breakdown. Corporations have to date won vast sums through ISDS, of which energy giants have secured $84bn. That represents the combined GDP