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How do you perceive our political system operates? It could be along the lines of this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills pass into law. Statutes is maintained by the courts. That's it. Well, that used to be how it used to work. Those days are over.

The Emergence of Secret Courts

Today, overseas companies, or the wealthy individuals that control them, have the power to sue nation states for the laws they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held in secret. In contrast to domestic courts, these panels grant no avenue for appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even companies operating from this country. They are open exclusively to businesses operating from foreign soil.

When a secret court finds that a legislative action may compromise the corporation’s anticipated profits, it can award financial penalties of hundreds of millions of pounds, potentially billions.

This compensation represent not real financial harm but money the arbitrators conclude the company might otherwise have made. The administration could be forced to rescind the measure. It is hesitant to introducing similar legislation in that area, worried about being sued.

A Mechanism Running Rampant

Record numbers of cases are being brought, as companies observe each other, and hedge funds finance suits for a share of a share of the takings. The consequence? Democratic sovereignty and democratic governance are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump national legislation and the choices enacted by elected bodies is that this stipulation has been incorporated – absent public approval, and typically amid conditions of extreme secrecy – inside trade treaties.

A Specific Example: The Cumbrian Coal Mine

A year ago, activists won a great victory at the High Court. The presiding officer ruled that schemes to dig the first deep coalmine in the UK for 30 years, in Cumbria, had been wrongly permitted by the Conservative government, which had accepted the extraordinary assertion that the mine would have no consequence on our carbon budgets. The new government subsequently revoked the permission the former government had approved. Currently, this success faces being overturned by an foreign court answering to no one but the entities filing the suit.

During August, a corporate entity whose beneficial owners are located in the offshore financial centre lodged a claim challenging the UK government. Recently a arbitration panel in the US capital was set up to adjudicate on it.

This firm is litigating against the UK for the profits it might have made if the mine had been allowed to go ahead. We have no idea how much this sum represents. Who is acting on its behalf against the British government? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot the MP. The administration makes a decision, the high court supports it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a sitting MP acts on its behalf.

The Russian Case

Concurrently that the court on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. We know scarce of the case at present, but it appears probable that he will utilise the ISDS mechanism to contest the penalties the UK levied against him subsequent to the invasion of Ukraine. He has started suing another European state for this reason, seeking $16bn: an amount representing half state's yearly budget. Included in the counsel on his side? Cherie Blair, wife of the previous PM.

Trade specialists contend that the EU’s procrastination in utilising seized state funds as collateral for its aid for Ukraine is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This unprecedented, secretive influence over elected governments might be preventing the money Ukraine desperately needs.

Empty Promises and Mounting Risks

We were assured that these events were not possible. In 2014, a former prime minister, promoting the largest and riskiest of all such treaties, stated: “Britain has agreed to investment treaty upon trade deal and there has never been a case in the past.” An adviser on this topic described critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries should be concerned by ISDS claims. Predictions that “when companies grasp the power bestowed upon them, they will shift their focus from the vulnerable countries to the wealthy nations” were dismissed with scepticism.

That threat is now a reality. In the current period, oil and gas and resource corporations have filed a unprecedented number of claims against nations both wealthy and developing, challenging – like the example of the Whitehaven project – government attempts to stop environmental catastrophe. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have been awarded $84bn. That represents the combined GDP