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What is your understand our political system operates? Perhaps similar to this. Citizens choose MPs. They vote on bills. If a majority is achieved, the bills are enacted as law. The law is upheld 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, along with the oligarchs that control them, have the power to sue nation states for the policies they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are conducted in secret. Unlike our courts, these bodies provide no opportunity to appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even companies based in this country. The door is open exclusively to entities based overseas.

Should an arbitration panel rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, running into billions.

These sums represent not real financial harm but money the panel members determine the company could potentially have made. The state might be compelled to abandon its policy. It will be deterred from passing future laws of a similar nature, due to the risk of facing litigation.

A Process Growing Exponentially

Unprecedented levels of legal actions are being brought, as companies take cues from each other, and investment funds finance suits in exchange for a share of the settlements. The consequence? Democratic sovereignty and popular rule are becoming unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to override domestic law and the rulings made by legislatures is that this clause has been written – without democratic mandate, and frequently under a climate of extreme secrecy – within bilateral investment treaties.

A Specific Instance: The Whitehaven Coalmine

A year ago, activists secured a significant win at the High Court. The judge determined that proposals to dig the first major coal mine in the UK for 30 years, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had no consequence on our carbon budgets. The incoming administration then withdrew the consent the Tories had issued. Currently, this victory could be compromised by an secret arbitration panel reporting to only the corporations filing the suit.

In August, a corporate entity whose final controllers reside in the offshore financial centre initiated proceedings versus the UK government. Last week a dispute settlement body in Washington DC was established to consider the case.

The claimant is seeking compensation from the UK for the money it might have made if the mine had been allowed to go ahead. Citizens have no idea how much this sum represents. Who is acting on its behalf challenging the state? A sitting MP, and former attorney-general in the Conservative government, that great patriot the MP. The government enacts a policy, the high court upholds it, then a international entity disputes it through an undemocratic arbitration panel, and a sitting MP works for its behalf.

An Oligarch's Challenge

Concurrently that the tribunal on the mining lawsuit was appointed, it was revealed from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are nothing of the case at present, but it is highly possible that he will utilise the ISDS mechanism to challenge the sanctions the UK imposed on him subsequent to the invasion of Ukraine. He has already initiated proceedings against another European state on these grounds, claiming a colossal sum: equivalent to half of government’s yearly budget. Among the legal team on his side? Cherie Blair, married to the previous PM.

Trade specialists contend that the EU’s delay in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine is due to apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over democratic administrations could be blocking the finance Ukraine critically depends on.

Empty Promises and Growing Risks

The public was told that these scenarios were not possible. Previously, a government leader, promoting the biggest and most dangerous of all such treaties, declared: “Britain has agreed to investment treaty upon trade deal and we have never seen a problem in the past.” An adviser on this topic described campaigners of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that only poorer nations had to worry about such legal actions. Cautionary notes that “once firms start to realise the influence they’ve been granted, they will turn their attention from the weak nations to the developed economies” were greeted by widespread derision.

That prediction has now materialised. This year, fossil fuel and mining firms have filed a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the UK mine – official measures to halt climate breakdown. Companies have thus far won vast sums through ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP