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How do you perceive our system of government functions? It could be along the lines of this. We elect MPs. They legislate on bills. Should a majority is achieved, the bills pass into law. Statutes is maintained by the courts. That's it. Well, that’s how it once functioned. Those days are over.

The Rise of Secret Courts

Today, foreign corporations, along with the oligarchs behind them, can sue governments for the policies they pass, at secret arbitration panels composed of business advocates. These proceedings take place behind closed doors. Unlike our courts, these tribunals grant no avenue for appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even companies operating from this country. Access is granted exclusively to entities registered abroad.

If a tribunal rules that a legislative action could harm the corporation’s anticipated profits, it may order compensation of hundreds of millions, running into billions.

This compensation are based not on real financial harm but funds the arbitrators decide the company would perhaps have made. The government may have to rescind the measure. It is discouraged from passing future laws of a similar nature, due to the risk of facing litigation.

A Process Running Rampant

Unprecedented levels of cases are being brought, as corporations take cues from each other, and hedge funds bankroll lawsuits in return for a share of the awards. The outcome? Democratic sovereignty and democratic governance are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump a country's own laws and the decisions taken by elected bodies is that this stipulation has been inserted – absent public approval, and frequently under an atmosphere of extreme secrecy – into international trade agreements.

A Real-World Case: The Cumbrian Coal Mine

Twelve months ago, activists achieved a major legal triumph at the High Court. The judge found that plans to open the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine would have no consequence on national carbon targets. The Labour government then withdrew the permission the Tories had approved. Currently, this victory is under threat by an foreign court accountable to no one but the companies petitioning it.

Last August, a corporate entity whose ultimate owners are located in the offshore financial centre initiated proceedings challenging the UK government. Last week a tribunal in Washington DC was established to hear it.

This firm is seeking compensation from the UK for the revenue it would have generated if the mine had been allowed to commence operations. We have no clear indication how much this could amount to. Who is representing it challenging the UK administration? An elected representative, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a foreign company disputes it through an secretive offshore tribunal, and a elected official represents its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coalmine case was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. Details are scarce of the case to date, but it seems likely that he may employ the ISDS mechanism to challenge the sanctions the UK enacted against him following the war in Ukraine. He has already initiated proceedings against another European state with similar intent, seeking sixteen billion dollars: equivalent to half of state's yearly income. Among the legal team acting for him in that case? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts contend that the EU’s delay in utilising seized Russian assets as guarantee for its financial support package stems from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

False Assurances and Escalating Risks

Politicians promised that these events were not possible. Previously, a senior politician, promoting the largest and riskiest of all these agreements, told us: “Britain has agreed to trade deal after trade deal and we have never seen a case in the past.” A consultant on this matter labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that only poorer nations had to worry about these lawsuits. Cautionary notes that “as corporations start to realise the authority they now possess, they will turn their attention from the weak nations to the wealthy nations” were dismissed with scepticism.

That warning is now a reality. This year, energy and extraction companies have filed a unprecedented number of suits against nations rich and poor, opposing – as in the case of the Whitehaven project – state efforts to halt global warming. Firms have thus far won $114bn by using ISDS, of which energy giants have secured $84bn. That represents the combined GDP