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How do you perceive our political system works? It could be along the lines of this. We elect MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. Legislation is maintained by the courts. End of story. Yet, that used to be how it once functioned. Not anymore.

The Emergence of Secret Courts

In the modern era, foreign corporations, and the wealthy individuals that control them, have the power to sue nation states for the regulations they pass, at offshore tribunals made up of business advocates. These proceedings take place in secret. Differing from national judiciaries, 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 companies headquartered in this country. They are open only to businesses based overseas.

Should an arbitration panel finds that a legislative action might diminish the corporation’s anticipated profits, it can award damages of vast sums, potentially billions.

These sums constitute not tangible damages but funds the arbitrators conclude the company would perhaps have made. The state might be compelled to drop the legislation. It becomes discouraged from introducing similar legislation in that area, due to the risk of being sued.

A Process Running Rampant

Unprecedented levels of legal actions are being brought, as corporations observe each other, and private equity fund legal actions in return for a cut of the awards. The consequence? Democratic sovereignty and democratic governance are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override national legislation and the rulings enacted by elected bodies is that this provision has been written – without democratic mandate, and often in conditions of total confidentiality – inside bilateral investment treaties.

A Concrete Case: The UK Coalmine

Twelve months ago, a conservation group won a great victory at the high court. The judge found that proposals to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have had no impact on our carbon budgets. The incoming administration then withdrew the consent the previous administration had approved. Now, this success could be compromised by an offshore tribunal accountable to exclusively the corporations petitioning it.

In August, a company whose ultimate owners are located in the tax haven lodged a claim challenging the UK government. Recently a arbitration panel in the US capital was established to consider the case.

The company is suing the UK for the profits it could have earned if the mine had received permission to commence operations. The public has no idea how much this sum represents. What legal team is serving as its counsel in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court upholds it, then a foreign company disputes it through an undemocratic arbitration panel, and a member of our parliament acts on its behalf.

The Russian Lawsuit

On the same day that the court on the coal mine dispute was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows little of the case so far, but it is highly possible that he’ll use the tribunal to challenge the sanctions the UK enacted against him following the Russian aggression. He has already filed a claim against a small nation for this reason, seeking a colossal sum: half that government’s annual revenue. Part of the lawyers acting for him in that case? Cherie Blair, wife of the ex-UK leader.

Trade specialists contend that the EU’s delay in utilising seized Russian assets as security for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations could be blocking the finance Ukraine urgently requires.

False Assurances and Mounting Threats

Politicians promised that these events wouldn’t happen. Previously, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to investment treaty after trade deal and we have never seen a case in the past.” An adviser on this matter labelled critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations should be concerned by such legal actions. Warnings that “as corporations begin to understand the influence they now possess, they will turn their attention from the weak nations to the developed economies” were dismissed with general mockery.

That threat has now materialised. This year, fossil fuel and extraction companies have lodged a record number of claims against nations across the economic spectrum, opposing – as in the case of the UK mine – government attempts to prevent environmental catastrophe. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP