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How do you perceive our system of government operates? It could be similar to this. Citizens choose MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. The law is upheld by the courts. End of story. Well, that used to be how it once functioned. Not anymore.

The Advent of Secret Courts

Today, international firms, or the oligarchs that control them, can sue elected administrations for the laws they pass, at private courts staffed by corporate lawyers. These proceedings are held away from public scrutiny. Unlike our courts, these tribunals grant no right of appeal or legal review. Ordinary citizens cannot take a case to them, and neither can our government, including enterprises headquartered in this country. The door is open solely for businesses registered abroad.

If a tribunal rules that a law or policy could harm the corporation’s anticipated profits, it may order financial penalties of vast sums, even billions.

These awards represent not actual losses but money the panel members determine the company might otherwise have made. The government might be compelled to rescind the measure. It will be discouraged from passing future laws of a similar nature, worried about facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being filed, as companies take cues from each other, and private equity fund legal actions in exchange for a portion of the settlements. The outcome? Sovereignty and democracy are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the decisions taken by parliaments is that this provision has been written – without public consent, and frequently under a climate of total confidentiality – into bilateral investment treaties.

A Real-World Example: The Whitehaven Coalmine

A year ago, environmental campaigners achieved a major legal triumph at the High Court. The judge found that schemes to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were wrongly permitted by the Conservative government, which had accepted the bizarre claim that the mine would have had no impact on climate commitments. The Labour government then withdrew the licence the previous administration had granted. Now, this legal outcome is under threat by an offshore tribunal accountable to no one but the corporations petitioning it.

During August, a corporate entity whose ultimate owners are located in the offshore financial centre lodged a claim challenging the UK government. Last week a arbitration panel in the United States was established to consider the case.

The company is suing the UK for the profits it could have earned if the mine had received permission to go ahead. The public has little idea how much this might be. What legal team is acting on its behalf against the UK administration? An elected representative, and former attorney-general in the Conservative government, that great patriot Geoffrey Cox. The government makes a decision, the national judiciary supports it, then a international entity disputes it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

A Sanctions Case

On the same day that the court on the coal mine dispute was established, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are scarce of the case to date, but it is highly possible that he may employ the tribunal to challenge the penalties the UK enacted against him after the Russian aggression. He has already filed a claim against a small nation with similar intent, seeking $16bn: half that state's yearly income. Included in the lawyers representing him there? the wife of a former prime minister, married to the previous PM.

Trade specialists argue that the EU’s procrastination in using frozen state funds as security for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over democratic administrations could be blocking the money Ukraine critically depends on.

Empty Promises and Mounting Threats

We were assured that these events were not possible. In 2014, a senior politician, championing the most significant and hazardous of all these agreements, told us: “The UK has signed trade agreement after trade deal and we have never seen a case in the past.” An adviser on this topic labelled critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression seemed to be that solely developing countries should be concerned by such legal actions. Cautionary notes that “as corporations start to realise the authority they now possess, they will shift their focus from the poorer states to the strong ones” were met with widespread derision.

That prediction has now materialised. Recently, energy and resource corporations have lodged a record number of cases against nations rich and poor, opposing – similar to the Cumbrian coalmine – state efforts to halt environmental catastrophe. Firms have so far won $114bn via ISDS, of which fossil fuel companies have been awarded the majority. That is equivalent to the combined GDP