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What is your perceive our system of government operates? It could be similar to this. We elect MPs. They legislate on bills. Should a majority is secured, the bills pass into law. The law are enforced by the courts. Simple as that. Well, that used to be how it once functioned. Not anymore.

The Rise of Secret Courts

Nowadays, foreign corporations, and the billionaires that control them, can sue nation states for the laws they pass, at private courts composed of commercial attorneys. The cases are conducted behind closed doors. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, including enterprises headquartered in this country. They are open exclusively to corporations registered abroad.

Should an arbitration panel finds that a law or policy could harm the corporation’s anticipated profits, it may order damages of hundreds of millions, running into billions.

These awards constitute not tangible damages but money the arbitrators determine the company could potentially have made. The state may have to drop the legislation. It becomes deterred from passing future laws along the same lines, for fear of being sued.

A Mechanism Running Rampant

Historically high figures of legal actions are being initiated, as companies observe each other, and private equity finance suits for a share of a share of the awards. The result? National sovereignty and democracy are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede domestic law and the choices enacted by legislatures is that this clause has been written – without democratic mandate, and frequently under an atmosphere of profound opacity – within bilateral investment treaties.

A Concrete Example: The UK Coal Mine

Twelve months ago, activists achieved a major legal triumph at the senior court. The presiding officer determined that proposals to dig the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had endorsed the extraordinary assertion that the mine would have no consequence on climate commitments. The Labour government subsequently revoked the licence the previous administration had issued. Now, this victory faces being overturned by an offshore tribunal reporting to only the corporations petitioning it.

In August, a corporate entity whose final controllers reside in the offshore financial centre lodged a claim challenging the UK government. Recently a dispute settlement body in the United States was set up to consider the case.

This firm is seeking compensation from the UK for the money it might have made if the mine had been allowed to commence operations. We have no idea how much this sum represents. Who is acting on its behalf in opposition to the British government? A sitting MP, and ex-law officer in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The administration makes a decision, the national judiciary validates it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

The Russian Challenge

Simultaneously that the panel on the coal mine dispute was appointed, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. The public knows little of the case at present, but it appears probable that he’ll use the tribunal to contest the restrictions the UK enacted against him subsequent to the war in Ukraine. He has started suing Luxembourg for this reason, seeking $16bn: an amount representing half nation's yearly income. Included in the counsel representing him there? Cherie Blair, married to the former British prime minister.

Legal experts contend that the EU’s hesitation in utilising seized Russian assets as security for its financial support package is due to apprehension in Brussels that it could be sued in the offshore corporate courts, under a investment pact. This remarkable, undemocratic power over elected governments may be obstructing the money Ukraine desperately needs.

Misleading Claims and Growing Risks

Politicians promised that such things could not occur. Years ago, a former prime minister, championing the largest and riskiest of all these agreements, declared: “Britain has agreed to trade agreement after trade deal and we have never seen a case in the past.” A consultant on this topic labelled critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message seemed to be that exclusively weaker states should be concerned by such legal actions. Predictions that “as corporations start to realise the power bestowed upon them, they will turn their attention from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That warning has now materialised. This year, fossil fuel and mining firms have filed a historic level of suits against nations rich and poor, opposing – similar to the Whitehaven project – government attempts to halt climate breakdown. Firms have thus far won $114bn by using ISDS, of which energy giants have obtained eighty-four billion dollars. That represents the combined GDP