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Can you perceive our system of government functions? Perhaps along the lines of this. The public votes for MPs. They legislate on bills. When a majority is obtained, the bills become law. Legislation are enforced by the courts. End of story. Well, that was how it once functioned. Those days are over.

The Emergence of Secret Courts

In the modern era, international firms, or the billionaires who own them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels made up of corporate lawyers. Such disputes are held away from public scrutiny. Differing from national judiciaries, these tribunals provide no avenue for appeal or legal review. You or I cannot take a case to them, nor can our government, including enterprises operating from this country. The door is open only to entities based overseas.

If a tribunal finds that a government measure may compromise the corporation’s projected profits, it has the power to grant compensation of hundreds of millions of pounds, running into billions.

These sums represent not real financial harm but money the panel members determine the company would perhaps have made. The state might be compelled to drop the legislation. It is discouraged from passing future laws of a similar nature, worried about incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of cases are being brought, as companies take cues from each other, and private equity bankroll lawsuits in exchange for a share of the takings. The consequence? Sovereignty and popular rule are turning into unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the choices taken by legislatures is that this clause has been incorporated – absent public approval, and frequently under an atmosphere of profound opacity – into bilateral investment treaties.

A Real-World Instance: The Whitehaven Coalmine

A year ago, a conservation group won a great victory at the High Court. The judge ruled that plans to excavate the first new deep coal mine in the UK for 30 years, in Cumbria, had been illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine would have zero effect on our carbon budgets. The incoming administration subsequently revoked the permission the Tories had approved. Currently, this success is under threat by an offshore tribunal accountable to exclusively the companies filing the suit.

In August, a firm whose final controllers are located in the tax haven lodged a claim challenging the UK government. Recently a dispute settlement body in Washington DC was convened to consider the case.

The company is suing the UK for the profits it could have earned if the mine had been allowed to proceed. The public has no idea how much this might be. Who is acting on its behalf challenging the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a international entity contests it through an secretive private court, and a member of our parliament works for its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coalmine case was established, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case so far, but it appears probable that he may employ the tribunal to contest the restrictions the UK levied against him subsequent to the invasion of Ukraine. He has already initiated proceedings against a small nation with similar intent, demanding a colossal sum: an amount representing half government’s yearly income. Included in the legal team acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

Trade specialists believe that the EU’s hesitation in utilising seized oligarchs' funds as guarantee for its financial support package arises from Belgium’s fear that it could be sued in the ISDS tribunals, under a trade agreement. This extraordinary, secretive influence over democratic administrations could be blocking the finance Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that these scenarios were not possible. In 2014, a former prime minister, promoting the biggest and most dangerous of all investment pacts, declared: “The UK has signed trade agreement after trade deal and there has never been a case in the past.” A consultant on this matter accused campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about such legal actions. Cautionary notes that “as corporations start to realise the power they now possess, they will redirect their efforts from the weak nations to the strong ones” were greeted by scepticism.

That threat is now a reality. Recently, oil and gas and mining firms have lodged a unprecedented number of cases against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – official measures to halt climate breakdown. Companies have thus far won vast sums through ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP