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Can you perceive our democratic process operates? It could be similar to this. Citizens choose MPs. They vote on bills. If a majority is secured, the bills are enacted as law. The law is maintained by the courts. That's it. Well, that’s how it once functioned. Those days are over.

The Rise of Secret Courts

In the modern era, foreign corporations, and the oligarchs behind them, have the power to sue governments for the laws they pass, at offshore tribunals made up of business advocates. These proceedings take place away from public scrutiny. In contrast to domestic courts, these tribunals grant no right of appeal or judicial review. The general public are unable to file a case to them, just as our government, or even enterprises headquartered in this country. The door is open solely for entities registered abroad.

If a tribunal finds that a law or policy might diminish the corporation’s projected profits, it may order damages of hundreds of millions of pounds, even billions.

These awards are based not on real financial harm but funds the panel members determine the company would perhaps have made. The administration might be compelled to abandon its policy. It becomes discouraged from introducing similar legislation in that area, worried about being sued.

A Process Spiralling Out of Control

Record numbers of disputes are being brought, as firms learn from each other, and hedge funds finance suits for a share of a cut of the awards. The result? National sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede a country's own laws and the choices enacted by legislatures is that this provision has been written – without public consent, and often in conditions of total confidentiality – inside bilateral investment treaties.

A Specific Case: The Cumbrian Coal Mine

Twelve months ago, activists achieved a major legal triumph at the high court. The justice found that schemes to dig the first deep coalmine in the UK for three decades, in northwest England, were found to be unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine would have had no impact on national carbon targets. The Labour government subsequently revoked the licence the previous administration had granted. Today, this success could be compromised by an offshore tribunal answering to exclusively the entities petitioning it.

In August, a corporate entity whose final controllers are based in the Cayman Islands lodged a claim challenging the UK government. The previous week a tribunal in Washington DC was established to hear it.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had received permission to commence operations. We have no clear indication how much this might be. Who is serving as its counsel challenging the state? An elected representative, and previous senior legal advisor in the Conservative government, that great patriot Geoffrey Cox. The government enacts a policy, the high court supports it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

An Oligarch's Challenge

On the same day that the court on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are scarce of the case at present, but it is highly possible that he may employ the tribunal to challenge the sanctions the UK levied against him after the invasion of Ukraine. He has previously started suing a small nation with similar intent, seeking $16bn: an amount representing half government’s yearly income. Included in the counsel acting for him in that case? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s hesitation in leveraging immobilised Russian assets as security for its loan to Ukraine arises from Belgium’s fear that it could be sued in the ISDS tribunals, under a investment pact. This unprecedented, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

Empty Promises and Escalating Threats

We were assured that these events were not possible. Years ago, a senior politician, promoting the biggest and most dangerous of all investment pacts, declared: “The UK has signed trade deal upon trade deal and we have never seen a issue in the past.” An expert on this topic described activists of “alarmism … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries should be concerned by ISDS claims. Cautionary notes that “when companies grasp the influence they now possess, they will turn their attention from the weak nations to the developed economies” were dismissed with scepticism.

That warning has come to pass. Recently, fossil fuel and resource corporations have lodged a record number of suits against nations both wealthy and developing, challenging – as in the case of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained $84bn. That represents the combined GDP