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How do you understand our political system operates? It could be something like this. We elect MPs. They legislate on bills. Should a majority is achieved, the bills become law. The law is upheld by the courts. End of story. However, that’s how it once functioned. No longer.

The Rise of Secret Courts

Today, overseas companies, and the oligarchs behind them, are able to litigate against elected administrations for the laws they pass, at private courts made up of commercial attorneys. These proceedings take place in secret. Differing from national judiciaries, these bodies provide no avenue for appeal or legal review. The general public cannot take a case to them, nor can our government, or even companies operating from this country. They are open only to 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 vast sums, even billions.

These sums constitute not real financial harm but funds the panel members conclude the company might otherwise have made. The state may have to rescind the measure. It becomes deterred from passing future laws in that area, due to the risk of facing litigation.

A System Growing Exponentially

Historically high figures of disputes are being initiated, as firms observe each other, and private equity finance suits for a share of a cut of the awards. The consequence? National sovereignty and democratic governance are turning into too costly.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it can supersede domestic law and the decisions enacted by elected bodies is that this stipulation has been incorporated – absent public approval, and often in conditions of total confidentiality – inside international trade agreements.

A Concrete Instance: The Cumbrian Coalmine

Last year, activists secured a significant win at the senior court. The justice ruled that schemes to dig the first new deep coal mine in the UK for three decades, in Cumbria, had been wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine would have had no impact on climate commitments. The Labour government later cancelled the consent the previous administration had issued. Today, this victory faces being overturned by an secret arbitration panel accountable to exclusively the entities bringing the case.

During August, a corporate entity whose beneficial owners are located in the offshore financial centre initiated proceedings against the UK government. Recently a arbitration panel in the US capital was convened to consider the case.

The claimant is suing the UK for the profits it could have earned if the mine had been permitted to go ahead. We have little idea how much this could amount to. What legal team is serving as its counsel against the UK administration? A sitting MP, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the domestic court supports it, then a foreign company disputes it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

A Sanctions Challenge

On the same day that the tribunal on the coal mine dispute was appointed, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. We know scarce of the case to date, but it appears probable that he may employ the ISDS mechanism to contest the penalties the UK enacted against him following the Russian aggression. He has previously filed a claim against another European state on these grounds, demanding a colossal sum: half that state's annual revenue. Among the counsel acting for him in that case? Cherie Blair, married to the ex-UK leader.

Legal experts argue that the EU’s delay in using frozen state funds as guarantee for its loan to Ukraine is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over sovereign states may be obstructing the money Ukraine urgently requires.

False Assurances and Growing Threats

Politicians promised that these events could not occur. Years ago, a former prime minister, championing the most significant and hazardous of all these agreements, declared: “The UK has signed trade agreement after trade deal and we have never seen a problem in the past.” A consultant on this matter accused critics of “alarmism … the truth is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations needed to fear such legal actions. Predictions that “as corporations begin to understand the authority they’ve been granted, they will redirect their efforts from the weak nations to the strong ones” were dismissed with scepticism.

That prediction is now a reality. This year, oil and gas and extraction companies have initiated a record number of claims against nations both wealthy and developing, challenging – like the example of the Cumbrian coalmine – government attempts to halt global warming. Companies have thus far won $114bn by using ISDS, of which energy giants have been awarded $84bn. That is equivalent to the combined GDP