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What is your perceive our political system operates? It could be something like this. The public votes for MPs. They legislate on bills. When a majority is secured, the bills pass into law. Statutes is upheld by the courts. That's it. Well, that’s how it operated in the past. No longer.

The Rise of Secret Courts

Nowadays, overseas companies, or the oligarchs that control them, have the power to sue nation states for the laws they pass, at offshore tribunals composed of commercial attorneys. Such disputes are held away from public scrutiny. Differing from national judiciaries, these bodies grant no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even companies based in this country. The door is open exclusively to businesses operating from foreign soil.

If a tribunal determines that a government measure might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

These awards constitute not actual losses but compensation the tribunal officials determine the company would perhaps have made. The state may have to drop the legislation. It becomes discouraged from passing future laws along the same lines, worried about being sued.

A System Running Rampant

Record numbers of disputes are being initiated, as firms learn from each other, and hedge funds fund legal actions for a share of a share of the takings. The outcome? Democratic sovereignty and popular rule are becoming unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the rulings taken by parliaments is that this clause has been incorporated – without democratic mandate, and often in an atmosphere of profound opacity – inside international trade agreements.

A Concrete Instance: The Whitehaven Coal Mine

A year ago, activists won a great victory at the senior court. The presiding officer determined that schemes to dig the first deep coalmine in the UK for 30 years, in Cumbria, were found to be wrongly permitted by the previous government, which had accepted the bizarre claim that the mine would have had no impact on our carbon budgets. The incoming administration then withdrew the permission the previous administration had issued. Now, this legal outcome faces being overturned by an foreign court accountable to only the companies bringing the case.

During August, a firm whose ultimate owners reside in the Cayman Islands lodged a claim against the UK government. The previous week a dispute settlement body in Washington DC was set up to hear it.

This firm is suing the UK for the money it could have earned if the mine had been permitted to commence operations. We have no idea how much this might be. What legal team is acting on its behalf in opposition to the state? An elected representative, and former attorney-general in the outgoing administration, that great patriot the MP. The state enacts a policy, the high court validates it, then a international entity disputes it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

An Oligarch's Lawsuit

On the same day that the tribunal on the coal mine dispute was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are nothing of the case so far, but it appears probable that he may employ the tribunal to challenge the restrictions the UK enacted against him subsequent to the war in Ukraine. He has initiated proceedings against a small nation on these grounds, seeking $16bn: equivalent to half of government’s annual revenue. Included in the lawyers representing him there? a prominent lawyer, wife of the former British prime minister.

Trade specialists argue that the EU’s delay in leveraging immobilised Russian assets 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 bilateral investment treaty. This unprecedented, unaccountable authority over democratic administrations may be obstructing the funds Ukraine critically depends on.

Empty Promises and Escalating Costs

Politicians promised that these scenarios could not occur. In 2014, a government leader, championing the biggest and most dangerous of all these agreements, stated: “We’ve signed trade deal after trade deal and there has never been a case in the past.” A consultant on this issue described campaigners of “alarmism … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “as corporations grasp the power bestowed upon them, they will turn their attention from the weak nations to the strong ones” were met with scepticism.

That warning is now a reality. In the current period, oil and gas and extraction companies have initiated a record number of cases against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – state efforts to prevent environmental catastrophe. Corporations have so far won vast sums through ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP