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What is your understand our political system operates? It could be something like this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills become law. The law are enforced by the courts. End of story. However, that’s how it used to work. No longer.

The Advent of Secret Courts

Nowadays, international firms, or the billionaires that control them, are able to litigate against nation states for the laws they pass, at offshore tribunals staffed by commercial attorneys. These proceedings are conducted away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or judicial review. You or I cannot take a case to them, nor can our government, or even companies operating from this country. They are open solely for businesses registered abroad.

If a tribunal determines that a legislative action could harm the corporation’s expected profits, it has the power to grant financial penalties of vast sums, even billions.

This compensation are based not on real financial harm but money the panel members decide the company might otherwise have made. The state might be compelled to rescind the measure. It is discouraged from passing future laws in that area, for fear of being sued.

A Process Spiralling Out of Control

Historically high figures of cases are being initiated, as corporations take cues from each other, and hedge funds fund legal actions for a share of a cut of the takings. The result? National sovereignty and popular rule are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the decisions made by elected bodies is that this clause has been inserted – without democratic mandate, and often in conditions of profound opacity – within trade treaties.

A Specific Example: The Whitehaven Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The presiding officer determined that schemes to open the first new deep coal mine in the UK for 30 years, in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the bizarre claim that the mine could have no impact on our carbon budgets. The incoming administration subsequently revoked the licence the Tories had issued. Currently, this victory is under threat by an foreign court accountable to no one but the corporations filing the suit.

Last August, a firm whose final controllers are located in the tax haven initiated proceedings versus the UK government. Last week a arbitration panel in the United States was convened to adjudicate on it.

The company is suing the UK for the money it could have earned if the mine had received permission to go ahead. We have no clear indication how much this could amount to. What legal team is acting on its behalf challenging the British government? A sitting MP, and former attorney-general in the outgoing administration, that great patriot Geoffrey Cox. The administration makes a decision, the high court validates it, then a foreign company contests it through an undemocratic offshore tribunal, and a sitting MP represents its behalf.

The Russian Lawsuit

On the same day that the tribunal on the coal mine dispute was appointed, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case to date, but it is highly possible that he’ll use the ISDS mechanism to challenge the sanctions the UK levied against him subsequent to the war in Ukraine. He has previously filed a claim against a small nation for this reason, claiming $16bn: equivalent to half of state's yearly income. Part of the counsel acting for him in that case? a prominent lawyer, spouse of the ex-UK leader.

International law scholars argue that the EU’s procrastination in using frozen oligarchs' funds as collateral for its loan to Ukraine is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, secretive influence over democratic administrations could be blocking the money Ukraine critically depends on.

Empty Promises and Mounting Costs

We were assured that these events were not possible. Years ago, a government leader, advocating for the most significant and hazardous of all these agreements, told us: “We’ve signed trade deal upon trade deal and there has never been a issue in the past.” A consultant on this matter accused critics of “scaremongering … in reality, ISDS does not affect the UK much”. The prevailing narrative seemed to be that exclusively weaker states should be concerned by such legal actions. Warnings that “as corporations begin to understand the authority they now possess, they will redirect their efforts from the poorer states to the developed economies” were met with widespread derision.

That threat has come to pass. This year, oil and gas and mining firms have initiated a unprecedented number of cases against nations rich and poor, opposing – like the example of the Whitehaven project – official measures to halt global warming. Companies have to date won $114bn through ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP