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Can you reckon our system of government operates? Perhaps similar to this. Citizens choose MPs. They legislate on bills. When a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. That's it. Well, that was how it operated in the past. No longer.

The Emergence of Secret Courts

Today, foreign corporations, and the oligarchs that control them, have the power to sue elected administrations for the regulations they pass, at private courts made up of business advocates. Such disputes are held behind closed doors. Unlike our courts, these panels provide no right of appeal or legal review. Ordinary citizens are unable to file a case to them, just as our government, or even companies operating from this country. Access is granted only to businesses registered abroad.

Should an arbitration panel finds that a legislative action may compromise the corporation’s anticipated profits, it may order compensation of hundreds of millions, even billions.

This compensation constitute not actual losses but funds the panel members decide the company could potentially have made. The state might be compelled to abandon its policy. It becomes deterred from passing future laws along the same lines, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of disputes are being brought, as companies observe each other, and investment funds bankroll lawsuits in exchange for a cut of the takings. The consequence? National sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the rulings made by legislatures is that this stipulation has been inserted – without democratic mandate, and typically amid conditions of extreme secrecy – inside trade treaties.

A Specific Case: The Cumbrian Coal Mine

Last year, a conservation group secured a significant win at the High Court. The justice ruled that schemes to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had accepted the bizarre claim that the mine could have zero effect on climate commitments. The new government later cancelled the consent the previous administration had granted. Now, this success faces being overturned by an offshore tribunal reporting to no one but the corporations filing the suit.

Last August, a firm whose final controllers are based in the tax haven initiated proceedings versus the UK government. Recently a tribunal in the United States was convened to consider the case.

The company is seeking compensation from the UK for the revenue it would have generated if the mine had been allowed to go ahead. Citizens have little idea how much this could amount to. What legal team is representing it in opposition to the British government? A member of parliament, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The government passes a law, the national judiciary validates it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official represents its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case so far, but it appears probable that he will utilise the tribunal to fight the penalties the UK enacted against him after the war in Ukraine. He has filed a claim against another European state on these grounds, claiming sixteen billion dollars: half that state's annual revenue. Among the lawyers on his side? a prominent lawyer, spouse of the former British prime minister.

International law scholars argue that the EU’s hesitation in leveraging immobilised Russian assets as collateral for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, undemocratic power over democratic administrations may be obstructing the money Ukraine urgently requires.

False Assurances and Mounting Threats

We were assured that such things wouldn’t happen. Previously, a government leader, advocating for the largest and riskiest of all such treaties, told us: “We’ve signed trade agreement after trade deal and we have never seen a case in the past.” A consultant on this matter accused campaigners of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations should be concerned by these lawsuits. Warnings that “as corporations grasp the influence bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were greeted by general mockery.

That prediction has come to pass. Recently, energy and mining firms have filed a historic level of cases against nations across the economic spectrum, contesting – as in the case of the UK mine – state efforts to stop climate breakdown. Corporations have so far won vast sums via ISDS, of which fossil fuel companies have secured the majority. That represents the combined GDP