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Can you understand our system of government functions? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. If a majority is secured, the bills pass into law. Legislation is maintained by the courts. That's it. Well, that was how it once functioned. Those days are over.

The Advent of Secret Courts

In the modern era, overseas companies, and the wealthy individuals that control them, are able to litigate against governments for the policies they pass, at private courts composed of corporate lawyers. The cases are held in secret. Differing from national judiciaries, these bodies grant no opportunity to appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, including enterprises based in this country. Access is granted only to entities registered abroad.

When a secret court rules that a government measure might diminish the corporation’s anticipated profits, it can award compensation of hundreds of millions, running into billions.

These sums constitute not real financial harm but money the arbitrators conclude the company could potentially have made. The state could be forced to rescind the measure. It is discouraged from introducing similar legislation in that area, worried about incurring a lawsuit.

A System Growing Exponentially

Record numbers of disputes are being filed, as corporations observe each other, and investment funds bankroll lawsuits for a share of a portion of the takings. The outcome? Democratic sovereignty and democratic governance are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it can supersede a country's own laws and the rulings enacted by parliaments is that this clause has been inserted – without public consent, and typically amid a climate of extreme secrecy – inside bilateral investment treaties.

A Concrete Instance: The Cumbrian Coalmine

Last year, environmental campaigners won a great victory at the senior court. The judge ruled that plans to excavate the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the bizarre claim that the mine would have zero effect on our carbon budgets. The new government later cancelled the permission the former government had granted. Currently, this success is under threat by an foreign court answering to no one but the entities filing the suit.

During August, a firm whose ultimate owners reside in the Cayman Islands filed a lawsuit against the UK government. Recently a tribunal in Washington DC was convened to consider the case.

The company is suing the UK for the profits it would have generated if the mine had been allowed to commence operations. Citizens have little idea how much this might be. What legal team is serving as its counsel in opposition to the British government? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The government enacts a policy, the domestic court validates it, then a overseas corporation disputes it through an unaccountable private court, and a member of our parliament acts on its behalf.

An Oligarch's Lawsuit

Simultaneously that the tribunal on the mining lawsuit was convened, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it appears probable that he will utilise the ISDS mechanism to challenge the restrictions the UK imposed on him subsequent to the war in Ukraine. He has started suing Luxembourg on these grounds, claiming sixteen billion dollars: an amount representing half state's yearly income. Part of the counsel on his side? Cherie Blair, spouse of the previous PM.

Legal experts argue that the EU’s delay in leveraging immobilised state funds as collateral for its financial support package stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, undemocratic power over democratic administrations could be blocking the funds Ukraine desperately needs.

False Assurances and Escalating Threats

The public was told that these scenarios wouldn’t happen. Years ago, a senior politician, promoting the largest and riskiest of all these agreements, declared: “The UK has signed investment treaty after trade deal and there has never been a case in the past.” A consultant on this issue accused activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The overall message appeared to be that exclusively weaker states had to worry about these lawsuits. Warnings that “as corporations begin to understand the power bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were met with widespread derision.

That threat has come to pass. Recently, oil and gas and mining firms have initiated a unprecedented number of suits against nations both wealthy and developing, contesting – similar to the Cumbrian coalmine – state efforts to stop global warming. Companies have thus far won vast sums by using ISDS, of which fossil fuel companies have been awarded $84bn. That equates to the combined GDP