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What is your perceive our political system operates? It could be something like this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. End of story. Well, that was how it used to work. No longer.

The Advent of Secret Courts

Today, foreign corporations, and the billionaires behind them, can sue elected administrations for the laws they pass, at private courts staffed by commercial attorneys. Such disputes are conducted in secret. Unlike our courts, these panels allow no opportunity to appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, including enterprises headquartered in this country. Access is granted exclusively to corporations based overseas.

When a secret court rules that a government measure might diminish the corporation’s anticipated profits, it can award damages of hundreds of millions of pounds, even billions.

These sums constitute not tangible damages but funds the panel members decide the company would perhaps have made. The government may have to abandon its policy. It is deterred from enacting future policies along the same lines, for fear of being sued.

A System Growing Exponentially

Record numbers of legal actions are being initiated, as corporations take cues from each other, and private equity fund legal actions for a share of a portion of the takings. The outcome? Democratic sovereignty and popular rule are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the decisions taken by elected bodies is that this provision has been inserted – without democratic mandate, and frequently under a climate of profound opacity – within bilateral investment treaties.

A Concrete Instance: The Cumbrian Coal Mine

A year ago, activists achieved a major legal triumph at the senior court. The presiding officer found that schemes to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the questionable argument that the mine would have no consequence on our carbon budgets. The incoming administration later cancelled the licence the former government had granted. Currently, this success faces being overturned by an secret arbitration panel answering to exclusively the entities petitioning it.

During August, a company whose final controllers are based in the tax haven filed a lawsuit versus the UK government. Recently a tribunal in the United States was established to consider the case.

The company is seeking compensation from the UK for the profits it might have made if the mine had received permission to commence operations. Citizens have little idea how much this might be. Who is serving as its counsel challenging the UK administration? A member of parliament, and former attorney-general in the previous government, the self-proclaimed patriot the MP. The state enacts a policy, the national judiciary upholds it, then a overseas corporation challenges it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

A Sanctions Challenge

Concurrently that the panel on the coalmine case was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know nothing of the case at present, but it is highly possible that he’ll use the ISDS mechanism to challenge the penalties the UK enacted against him after the invasion of Ukraine. He has already initiated proceedings against another European state for this reason, demanding $16bn: half that state's annual revenue. Included in the lawyers on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s hesitation in using frozen Russian assets as guarantee for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, unaccountable authority over elected governments could be blocking the money Ukraine urgently requires.

False Assurances and Growing Threats

The public was told that such things could not occur. Previously, a government leader, advocating for the biggest and most dangerous of all investment pacts, declared: “The UK has signed trade agreement upon trade deal and we have never seen a problem in the past.” A consultant on this matter described campaigners of “exaggeration … in reality, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states had to worry about such legal actions. Warnings that “when companies grasp the authority bestowed upon them, they will turn their attention from the weak nations to the wealthy nations” were dismissed with scepticism.

That prediction has now materialised. Recently, oil and gas and resource corporations have initiated a unprecedented number of suits against nations across the economic spectrum, challenging – similar to the Whitehaven project – official measures to prevent environmental catastrophe. Corporations have so far won $114bn by using ISDS, of which fossil fuel companies have been awarded $84bn. That is equivalent to the combined GDP