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What is your perceive our system of government functions? Maybe along the lines of this. Citizens choose MPs. They legislate on bills. If a majority is achieved, the bills are enacted as law. The law is maintained by the courts. That's it. However, that was how it used to work. Those days are over.

The Advent of Secret Courts

Nowadays, overseas companies, or the wealthy individuals that control them, are able to litigate against nation states for the regulations they pass, at private courts made up of business advocates. Such disputes are conducted away from public scrutiny. In contrast to domestic courts, these bodies provide no right of appeal or judicial review. The general public are unable to file a case to them, just as our government, including companies headquartered in this country. The door is open exclusively to businesses registered abroad.

Should an arbitration panel rules that a government measure might diminish the corporation’s projected profits, it can award compensation of hundreds of millions of pounds, running into billions.

These sums represent not tangible damages but compensation the arbitrators determine the company might otherwise have made. The administration could be forced to abandon its policy. It is discouraged from enacting future policies in that area, worried about facing litigation.

A Process Growing Exponentially

Unprecedented levels of disputes are being initiated, as firms learn from each other, and hedge funds bankroll lawsuits for a share of a cut of the awards. The consequence? Sovereignty and democratic governance are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the rulings made by legislatures is that this provision has been inserted – absent public approval, and frequently under an atmosphere of profound opacity – inside international trade agreements.

A Concrete Case: The UK Coalmine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The judge found that plans to dig the first major coal mine in the UK for three decades, in northwest England, were illegally sanctioned by the previous 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 former government had approved. Now, this legal outcome faces being overturned by an offshore tribunal reporting to no one but the companies petitioning it.

Last August, a corporate entity whose beneficial owners are based in the tax haven lodged a claim versus the UK government. The previous week a arbitration panel in the United States was established to consider the case.

This firm is litigating against the UK for the revenue it would have generated if the mine had received permission to commence operations. The public has little idea how much this sum represents. Which individual is representing it in opposition to the British government? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a overseas corporation disputes it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case to date, but it seems likely that he’ll use the ISDS mechanism to contest the restrictions the UK levied against him after the Russian aggression. He has previously filed a claim against another European state on these grounds, demanding $16bn: equivalent to half of government’s yearly budget. Included in the lawyers representing him there? Cherie Blair, wife of the previous PM.

Legal experts believe that the EU’s delay in utilising seized Russian assets as guarantee for its aid for Ukraine stems from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This unprecedented, secretive influence over democratic administrations might be preventing the funds Ukraine urgently requires.

False Assurances and Escalating Threats

The public was told that these events could not occur. Years ago, a government leader, advocating for the largest and riskiest of all such treaties, declared: “Britain has agreed to trade deal after trade deal and there has never been a case in the past.” A consultant on this issue described activists of “alarmism … the truth is, ISDS barely touches the UK much”. The general impression seemed to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “when companies grasp the power bestowed upon them, they will turn their attention from the weak nations to the strong ones” were met with general mockery.

That threat has come to pass. Recently, fossil fuel and resource corporations have filed a historic level of claims against nations rich and poor, contesting – like the example of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Companies have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP