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Can you reckon our system of government functions? It could be along the lines of this. We elect MPs. They debate and pass bills. If a majority is achieved, the bills become law. Legislation are enforced by the courts. Simple as that. Well, that was how it once functioned. Not anymore.

The Emergence of Secret Courts

In the modern era, overseas companies, or the wealthy individuals that control them, are able to litigate against nation states for the regulations they pass, at offshore tribunals composed of business advocates. The cases are held away from public scrutiny. In contrast to domestic courts, these bodies grant no right of appeal or judicial review. Ordinary citizens are unable to file a case to them, nor can our government, including enterprises operating from this country. Access is granted only to businesses operating from foreign soil.

When a secret court rules that a government measure may compromise the corporation’s projected profits, it may order damages of hundreds of millions, even billions.

These awards constitute not real financial harm but compensation the arbitrators conclude the company could potentially have made. The administration could be forced to rescind the measure. It is discouraged from introducing similar legislation of a similar nature, worried about being sued.

A Process Growing Exponentially

Unprecedented levels of disputes are being initiated, as firms observe each other, and investment funds finance suits in return for a portion of the takings. The consequence? National sovereignty and democratic governance are turning into unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the rulings taken by parliaments is that this provision has been incorporated – absent public approval, and frequently under an atmosphere of total confidentiality – into trade treaties.

A Real-World Case: The UK Coalmine

Twelve months ago, activists achieved a major legal triumph at the senior court. The justice determined that proposals to dig the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be unlawfully approved by the Conservative government, which had endorsed the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The Labour government later cancelled the consent the former government had approved. Currently, this legal outcome could be compromised by an secret arbitration panel reporting to only the companies petitioning it.

During August, a company whose ultimate owners reside in the Cayman Islands filed a lawsuit challenging the UK government. Recently a arbitration panel in the US capital was established to hear it.

The company is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to proceed. We have no clear indication how much this sum represents. Who is representing it against the UK administration? An elected representative, and previous senior legal advisor in the previous government, the noted patriot Sir Geoffrey Cox. The government enacts a policy, the national judiciary supports it, then a international entity contests it through an unaccountable private court, and a sitting MP acts on its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the coal mine dispute was established, information emerged from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows scarce of the case to date, but it appears probable that he may employ the tribunal to challenge the sanctions the UK enacted against him following the Russian aggression. He has previously filed a claim against a small nation on these grounds, seeking sixteen billion dollars: an amount representing half nation's yearly budget. Among the legal team acting for him in that case? a prominent lawyer, married to the previous PM.

Trade specialists believe that the EU’s hesitation in using frozen oligarchs' funds as collateral for its loan to Ukraine arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a trade agreement. This remarkable, secretive influence over democratic administrations may be obstructing the funds Ukraine urgently requires.

False Assurances and Mounting Threats

We were assured that these scenarios wouldn’t happen. In 2014, a senior politician, championing the biggest and most dangerous of all investment pacts, told us: “The UK has signed trade deal after trade deal and we have never seen a issue in the past.” A consultant on this issue accused campaigners of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that exclusively weaker states needed to fear ISDS claims. Warnings that “once firms grasp the authority they now possess, they will turn their attention from the weak nations to the developed economies” were met with widespread derision.

That warning has come to pass. This year, oil and gas and extraction companies have filed a unprecedented number of suits against nations across the economic spectrum, opposing – as in the case of the UK mine – government attempts to prevent global warming. Corporations have so far won vast sums through ISDS, of which oil majors have secured the majority. That represents the combined GDP