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Can you understand our system of government works? Perhaps along the lines of this. We elect MPs. They legislate on bills. If a majority is secured, the bills are enacted as law. The law are enforced by the courts. End of story. However, that was how it used to work. Those days are over.

The Rise of Secret Courts

In the modern era, international firms, along with the billionaires behind them, have the power to sue nation states for the policies they pass, at secret arbitration panels staffed by corporate lawyers. These proceedings are conducted behind closed doors. Differing from national judiciaries, these tribunals grant no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even businesses based in this country. The door is open only to corporations registered abroad.

Should an arbitration panel determines that a law or policy could harm the corporation’s projected profits, it can award damages of vast sums, running into billions.

This compensation represent not tangible damages but money the panel members determine the company could potentially have made. The state might be compelled to drop the legislation. It becomes discouraged from passing future laws of a similar nature, for fear of incurring a lawsuit.

A System Running Rampant

Record numbers of cases are being initiated, as companies take cues from each other, and hedge funds bankroll lawsuits for a share of a share of the takings. The consequence? National sovereignty and democratic governance are becoming too costly.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can supersede a country's own laws and the rulings made by elected bodies is that this provision has been written – absent public approval, and often in an atmosphere of extreme secrecy – inside international trade agreements.

A Real-World Case: The Whitehaven Coalmine

A year ago, environmental campaigners secured a significant win at the high court. The justice determined that proposals to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were illegally sanctioned by the previous government, which had endorsed the bizarre claim that the mine would have no consequence on our carbon budgets. The new government subsequently revoked the permission the former government had issued. Today, this success is under threat by an foreign court reporting to no one but the corporations bringing the case.

In August, a company whose ultimate owners reside in the Cayman Islands filed a lawsuit versus the UK government. The previous week a arbitration panel in the United States was established to adjudicate on it.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had received permission to proceed. We have little idea how much this might be. Who is serving as its counsel against the UK administration? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government makes a decision, the domestic court supports it, then a overseas corporation disputes it through an unaccountable offshore tribunal, and a elected official represents its behalf.

The Russian Case

On the same day that the court on the coalmine case was appointed, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. Details are scarce of the case to date, but it seems likely that he’ll use the arbitration process to contest the penalties the UK imposed on him following the Russian aggression. He has started suing Luxembourg on these grounds, seeking $16bn: equivalent to half of nation's annual revenue. Part of the lawyers acting for him in that case? a prominent lawyer, married to the previous PM.

Trade specialists contend that the EU’s procrastination in using frozen oligarchs' funds as collateral for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This extraordinary, undemocratic power over sovereign states might be preventing the finance Ukraine critically depends on.

Empty Promises and Mounting Risks

The public was told that these scenarios wouldn’t happen. In 2014, a government leader, championing the most significant and hazardous of all such treaties, declared: “Britain has agreed to trade agreement upon trade deal and there has never been a issue in the past.” A consultant on this matter labelled activists of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “when companies grasp the influence they now possess, they will redirect their efforts from the vulnerable countries to the developed economies” were greeted by general mockery.

That prediction is now a reality. In the current period, energy and resource corporations have lodged a historic level of claims against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – state efforts to stop climate breakdown. Corporations have thus far won $114bn via ISDS, of which energy giants have secured eighty-four billion dollars. That represents the combined GDP