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Can you understand our political system operates? It could be similar to this. The public votes for MPs. They legislate on bills. When a majority is achieved, the bills pass into law. Legislation is upheld by the courts. Simple as that. Well, that’s how it operated in the past. Those days are over.

The Emergence of Secret Courts

Today, international firms, or the billionaires behind them, have the power to sue governments for the regulations they pass, at offshore tribunals made up of commercial attorneys. Such disputes take place in secret. Differing from national judiciaries, these bodies allow no avenue for appeal or judicial review. The general public cannot take a case to them, nor can our government, including businesses based in this country. The door is open exclusively to businesses operating from foreign soil.

If a tribunal finds that a government measure might diminish the corporation’s expected profits, it may order compensation of vast sums, potentially billions.

These sums are based not on real financial harm but money the tribunal officials conclude the company might otherwise have made. The state could be forced to abandon its policy. It becomes hesitant to enacting future policies of a similar nature, worried about incurring a lawsuit.

A System Spiralling Out of Control

Historically high figures of legal actions are being initiated, as firms learn from each other, and investment funds bankroll lawsuits in return for a portion of the settlements. The result? National sovereignty and democratic governance are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the decisions taken by legislatures is that this provision has been incorporated – absent public approval, and typically amid an atmosphere of extreme secrecy – inside trade treaties.

A Specific Instance: The Cumbrian Coal Mine

Twelve months ago, activists secured a significant win at the High Court. The judge determined that schemes to open the first deep coalmine in the UK for three decades, in northwest England, were found to be wrongly permitted by the previous government, which had agreed to the questionable argument that the mine could have no impact on climate commitments. The Labour government then withdrew the consent the previous administration had approved. Currently, this legal outcome is under threat by an secret arbitration panel reporting to no one but the corporations petitioning it.

During August, a corporate entity whose beneficial owners reside in the Cayman Islands lodged a claim against the UK government. Recently a arbitration panel in the US capital was convened to hear it.

The company is seeking compensation from the UK for the profits it would have generated if the mine had been allowed to proceed. The public has no idea how much this sum represents. Who is representing it challenging the UK administration? A member of parliament, and ex-law officer in the previous government, that great patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a foreign company challenges it through an unaccountable offshore tribunal, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

Concurrently that the panel on the coal mine dispute was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. The public knows little of the case to date, but it appears probable that he’ll use the arbitration process to contest the penalties the UK levied against him following the war in Ukraine. He has started suing another European state on these grounds, claiming $16bn: an amount representing half nation's yearly income. Among the legal team on his side? Cherie Blair, spouse of the former British prime minister.

International law scholars contend that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its financial support package is due to concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over elected governments could be blocking the money Ukraine desperately needs.

False Assurances and Growing Costs

We were assured that such things were not possible. In 2014, a government leader, championing the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade agreement upon trade deal and there has never been a case in the past.” An expert on this issue accused critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression appeared to be that only poorer nations needed to fear such legal actions. Cautionary notes that “when companies begin to understand the influence bestowed upon them, they will turn their attention from the weak nations to the developed economies” were met with widespread derision.

That threat has now materialised. In the current period, fossil fuel and extraction companies have lodged a historic level of suits against nations both wealthy and developing, challenging – similar to the Whitehaven project – government attempts to halt global warming. Corporations have to date won one hundred and fourteen billion dollars through ISDS, of which oil majors have secured the majority. That represents the combined GDP