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How do you perceive our political system operates? Perhaps similar to this. We elect MPs. They legislate on bills. Should a majority is obtained, the bills are enacted as law. The law is upheld by the courts. Simple as that. However, that used to be how it used to work. No longer.

The Emergence of Secret Courts

In the modern era, foreign corporations, or the wealthy individuals behind them, have the power to sue governments for the regulations they pass, at secret arbitration panels made up of corporate lawyers. Such disputes are conducted away from public scrutiny. Differing from national judiciaries, these panels allow no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, including enterprises headquartered in this country. The door is open only to businesses registered abroad.

If a tribunal determines that a government measure could harm the corporation’s anticipated profits, it may order financial penalties of vast sums, potentially billions.

These sums represent not tangible damages but compensation the tribunal officials conclude the company might otherwise have made. The administration could be forced to rescind the measure. It becomes hesitant to enacting future policies along the same lines, due to the risk of being sued.

A Process Growing Exponentially

Unprecedented levels of cases are being brought, as corporations observe each other, and private equity fund legal actions for a share of a portion of the settlements. The outcome? National sovereignty and popular rule are now unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede domestic law and the choices taken by elected bodies is that this provision has been inserted – absent public approval, and often in a climate of total confidentiality – within international trade agreements.

A Real-World Case: The Whitehaven Coal Mine

Twelve months ago, activists secured a significant win at the high court. The presiding officer ruled that plans to dig the first major coal mine in the UK for 30 years, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine would have had no consequence on climate commitments. The incoming administration later cancelled the permission the former government had granted. Today, this victory could be compromised by an secret arbitration panel reporting to only the corporations filing the suit.

During August, a firm whose beneficial owners are located in the Cayman Islands filed a lawsuit versus the UK government. Recently a arbitration panel in Washington DC was set up to adjudicate on it.

This firm is litigating against the UK for the profits it might have made if the mine had been permitted to proceed. Citizens have little idea how much this could amount to. Which individual is representing it against the UK administration? A sitting MP, and ex-law officer in the previous government, the self-proclaimed patriot the MP. The government enacts a policy, the domestic court supports it, then a foreign company disputes it through an secretive private court, and a sitting MP works for its behalf.

An Oligarch's Case

On the same day that the tribunal on the coal mine dispute was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. The public knows little of the case at present, but it seems likely that he will utilise the arbitration process to challenge the restrictions the UK levied against him subsequent to the Russian aggression. He has previously started suing another European state on these grounds, demanding sixteen billion dollars: an amount representing half state's yearly income. Included in the lawyers on his side? the wife of a former prime minister, spouse of the previous PM.

Trade specialists contend that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its aid for Ukraine stems from concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states might be preventing the finance Ukraine critically depends on.

False Assurances and Escalating Threats

We were assured that such things wouldn’t happen. Previously, a former prime minister, championing the biggest and most dangerous of all these agreements, stated: “Britain has agreed to trade deal after trade deal and we have never seen a issue in the past.” An adviser on this matter accused activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries needed to fear such legal actions. Warnings that “once firms start to realise the authority they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were met with widespread derision.

That threat has come to pass. This year, energy and extraction companies have lodged a record number of claims against nations rich and poor, challenging – like the example of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Firms have so far won $114bn through ISDS, of which fossil fuel companies have obtained the majority. That is equivalent to the combined GDP