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What is your perceive our system of government operates? Perhaps along the lines of this. We elect MPs. They debate and pass bills. Should a majority is obtained, the bills become law. Statutes is maintained by the courts. Simple as that. However, that was how it used to work. No longer.

The Emergence of Secret Courts

In the modern era, overseas companies, and the oligarchs who own them, are able to litigate against governments for the regulations they pass, at secret arbitration panels made up of corporate lawyers. The cases are conducted away from public scrutiny. Unlike our courts, these tribunals provide no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, just as our government, or even companies based in this country. Access is granted exclusively to entities registered abroad.

When a secret court finds that a law or policy could harm the corporation’s projected profits, it can award damages of vast sums, potentially billions.

This compensation are based not on actual losses but compensation the panel members determine the company would perhaps have made. The government might be compelled to drop the legislation. It is discouraged from passing future laws in that area, for fear of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being filed, as corporations observe each other, and private equity bankroll lawsuits in exchange for a cut of the takings. The consequence? National sovereignty and democratic governance are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can trump domestic law and the decisions taken by legislatures is that this provision has been written – without democratic mandate, and frequently under a climate of extreme secrecy – into international trade agreements.

A Concrete Case: The Whitehaven Coalmine

Twelve months ago, activists achieved a major legal triumph at the High Court. The presiding officer ruled that schemes to excavate the first new deep coal mine in the UK for a generation, in northwest England, had been unlawfully approved by the Conservative government, which had agreed to the bizarre claim that the mine could have no impact on climate commitments. The Labour government then withdrew the licence the former government had granted. Today, this success is under threat by an foreign court reporting to exclusively the companies bringing the case.

In August, a company whose final controllers are based in the Cayman Islands initiated proceedings against the UK government. Last week a tribunal in Washington DC was convened to adjudicate on it.

The company is litigating against the UK for the money it would have generated if the mine had been permitted to go ahead. Citizens have no idea how much this sum represents. Which individual is serving as its counsel against the British government? A sitting MP, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the domestic court upholds it, then a foreign company disputes it through an secretive private court, and a elected official represents its behalf.

An Oligarch's Case

On the same day that the panel on the coalmine case was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. We know nothing of the case to date, but it is highly possible that he’ll use the arbitration process to fight the restrictions the UK imposed on him following the Russian aggression. He has already started suing another European state for this reason, demanding sixteen billion dollars: equivalent to half of state's yearly budget. Included in the legal team acting for him in that case? Cherie Blair, wife of the ex-UK leader.

Legal experts contend that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its financial support package arises from concerns within Belgium that it could be sued in the offshore corporate courts, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations may be obstructing the finance Ukraine urgently requires.

Misleading Claims and Mounting Threats

We were assured that such things could not occur. Previously, a former prime minister, promoting the biggest and most dangerous of all these agreements, stated: “We’ve signed trade agreement after trade deal and we have never seen a case in the past.” An adviser on this issue accused critics of “exaggeration … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states needed to fear these lawsuits. Cautionary notes that “as corporations start to realise the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with widespread derision.

That warning has now materialised. In the current period, fossil fuel and resource corporations have initiated a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the UK mine – state efforts to halt global warming. Firms have to date won $114bn by using ISDS, of which fossil fuel companies have obtained $84bn. That is equivalent to the combined GDP