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Can you understand our political system operates? It could be similar to this. We elect MPs. They vote on bills. If a majority is achieved, the bills become law. Legislation is upheld by the courts. End of story. Well, that’s how it used to work. Those days are over.

The Advent of Secret Courts

In the modern era, foreign corporations, and the billionaires who own them, can sue governments for the policies they pass, at secret arbitration panels staffed by business advocates. These proceedings take place behind closed doors. Unlike our courts, these tribunals grant no opportunity to appeal or oversight by judges. The general public cannot take a case to them, nor can our government, including enterprises based in this country. Access is granted exclusively to entities operating from foreign soil.

When a secret court rules that a legislative action might diminish the corporation’s expected profits, it can award compensation of hundreds of millions, even billions.

These sums are based not on tangible damages but money the arbitrators determine the company might otherwise have made. The state may have to abandon its policy. It will be hesitant to enacting future policies of a similar nature, for fear of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being brought, as firms take cues from each other, and investment funds fund legal actions in exchange for a cut of the awards. The result? Sovereignty and democratic governance are turning into prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the choices made by parliaments is that this stipulation has been inserted – without public consent, and typically amid a climate of profound opacity – within international trade agreements.

A Concrete Instance: The Whitehaven Coalmine

A year ago, a conservation group secured a significant win at the High Court. The justice determined that schemes to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be wrongly permitted by the outgoing administration, which had agreed to the questionable argument that the mine could have zero effect on our carbon budgets. The incoming administration then withdrew the consent the previous administration had granted. Currently, this success could be compromised by an secret arbitration panel reporting to exclusively the corporations bringing the case.

In August, a firm whose beneficial owners are based in the offshore financial centre initiated proceedings challenging the UK government. The previous week a tribunal in the United States was set up to hear it.

This firm is litigating against the UK for the profits it would have generated if the mine had been permitted to proceed. We have no idea how much this might be. What legal team is acting on its behalf against the state? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the high court supports it, then a international entity contests it through an unaccountable private court, and a elected official works for its behalf.

The Russian Lawsuit

Concurrently that the panel on the mining lawsuit was established, information emerged from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows nothing of the case to date, but it appears probable that he may employ the ISDS mechanism to contest the restrictions the UK imposed on him following the invasion of Ukraine. He has started suing a small nation with similar intent, demanding a colossal sum: an amount representing half government’s annual revenue. Included in the lawyers representing him there? a prominent lawyer, wife of the former British prime minister.

Legal experts contend that the EU’s delay in using frozen state funds as collateral for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This remarkable, secretive influence over elected governments may be obstructing the money Ukraine urgently requires.

Empty Promises and Growing Risks

Politicians promised that these events could not occur. Years ago, a former prime minister, championing the biggest and most dangerous of all these agreements, told us: “We’ve signed trade agreement after trade deal and there has never been a problem in the past.” An expert on this topic described campaigners of “scaremongering … the fact is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “as corporations begin to understand the power bestowed upon them, they will turn their attention from the vulnerable countries to the wealthy nations” were dismissed with widespread derision.

That threat is now a reality. This year, oil and gas and mining firms have initiated a unprecedented number of cases against nations across the economic spectrum, challenging – like the example of the UK mine – government attempts to stop global warming. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have been awarded the majority. That represents the combined GDP