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What is your reckon our system of government operates? Maybe along the lines of this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills pass into law. The law is maintained by the courts. Simple as that. Well, that was how it operated in the past. No longer.

The Emergence of Secret Courts

Today, overseas companies, along with the wealthy individuals that control them, have the power to sue governments for the regulations they pass, at private courts composed of corporate lawyers. Such disputes are held in secret. Differing from national judiciaries, these bodies provide no avenue for appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, or even enterprises based in this country. They are open solely for businesses operating from foreign soil.

When a secret court finds that a government measure may compromise the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, potentially billions.

This compensation are based not on real financial harm but funds the tribunal officials conclude the company would perhaps have made. The government could be forced to rescind the measure. It becomes hesitant to introducing similar legislation of a similar nature, for fear of facing litigation.

A Process Spiralling Out of Control

Historically high figures of disputes are being filed, as corporations learn from each other, and private equity bankroll lawsuits in exchange for a share of the takings. The outcome? Democratic sovereignty and popular rule are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede domestic law and the choices enacted by elected bodies is that this provision has been written – without public consent, and typically amid a climate of extreme secrecy – into bilateral investment treaties.

A Real-World Instance: The Cumbrian Coal Mine

Twelve months ago, a conservation group won a great victory at the High Court. The justice found that plans to dig the first major coal mine in the UK for a generation, in northwest England, had been wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine would have had no consequence on our carbon budgets. The incoming administration later cancelled the consent the former government had issued. Today, this success is under threat by an offshore tribunal accountable to no one but the companies petitioning it.

During August, a corporate entity whose final controllers reside in the tax haven lodged a claim versus the UK government. Last week a arbitration panel in the United States was established to adjudicate on it.

This firm is suing the UK for the revenue it would have generated if the mine had been allowed to proceed. We have no idea how much this could amount to. Who is acting on its behalf challenging the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary upholds it, then a foreign company contests it through an secretive private court, and a member of our parliament acts on its behalf.

The Russian Challenge

On the same day that the panel on the coal mine dispute was appointed, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are little of the case to date, but it appears probable that he will utilise the arbitration process to fight the sanctions the UK levied against him after the Russian aggression. He has previously initiated proceedings against Luxembourg on these grounds, claiming $16bn: an amount representing half nation's yearly income. Included in the lawyers acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

International law scholars believe that the EU’s delay in using frozen oligarchs' funds as security for its loan to Ukraine is due to concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, undemocratic power over elected governments may be obstructing the finance Ukraine desperately needs.

Empty Promises and Escalating Risks

Politicians promised that these scenarios could not occur. Previously, a former prime minister, promoting the largest and riskiest of all such treaties, stated: “We’ve signed trade agreement after trade deal and we have never seen a problem in the past.” An expert on this issue described critics of “scaremongering … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations had to worry about such legal actions. Cautionary notes that “when companies begin to understand the authority they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were met with widespread derision.

That warning is now a reality. This year, fossil fuel and extraction companies have initiated a unprecedented number of claims against nations both wealthy and developing, opposing – similar to the UK mine – government attempts to prevent climate breakdown. Corporations have so far won $114bn through ISDS, of which oil majors have been awarded eighty-four billion dollars. That represents the combined GDP