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Can you reckon our political system works? Perhaps similar to this. Citizens choose MPs. They debate and pass bills. Should a majority is achieved, the bills pass into law. Statutes are enforced by the courts. That's it. Yet, that’s how it used to work. Those days are over.

The Advent of Secret Courts

In the modern era, international firms, and the wealthy individuals behind them, have the power to sue elected administrations for the regulations they pass, at private courts staffed by commercial attorneys. These proceedings are held in secret. In contrast to domestic courts, these bodies provide no avenue for appeal or legal review. The general public are unable to file a case to them, nor can our government, or even businesses based in this country. They are open solely for businesses operating from foreign soil.

When a secret court rules that a legislative action may compromise the corporation’s projected profits, it may order financial penalties of hundreds of millions, even billions.

These awards represent not real financial harm but funds the panel members conclude the company might otherwise have made. The state could be forced to abandon its policy. It becomes deterred from passing future laws in that area, for fear of facing litigation.

A Mechanism Spiralling Out of Control

Record numbers of disputes are being filed, as firms observe each other, and private equity bankroll lawsuits for a share of a share of the takings. The consequence? Sovereignty and democracy are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the choices made by elected bodies is that this provision has been written – without democratic mandate, and frequently under a climate of profound opacity – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coal Mine

Twelve months ago, a conservation group won a great victory at the High Court. The presiding officer found that schemes to dig the first new deep coal mine in the UK for three decades, in Cumbria, were illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine would have had no impact on climate commitments. The new government then withdrew the licence the Tories had issued. Currently, this success could be compromised by an secret arbitration panel reporting to exclusively the entities petitioning it.

In August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit versus the UK government. Last week a tribunal in the United States was set up to consider the case.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been allowed to proceed. Citizens have no clear indication how much this might be. What legal team is representing it in opposition to the state? An elected representative, and previous senior legal advisor in the outgoing administration, the noted patriot Sir Geoffrey Cox. The administration makes a decision, the domestic court supports it, then a overseas corporation contests it through an undemocratic private court, and a elected official works for its behalf.

The Russian Lawsuit

On the same day that the panel on the mining lawsuit was convened, information emerged from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case to date, but it is highly possible that he’ll use the tribunal to fight the sanctions the UK levied against him after the war in Ukraine. He has started suing another European state with similar intent, seeking sixteen billion dollars: equivalent to half of state's yearly income. Included in the legal team representing him there? the wife of a former prime minister, wife of the ex-UK leader.

International law scholars argue that the EU’s hesitation in leveraging immobilised Russian assets as collateral for its aid for Ukraine arises from Belgium’s fear that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, unaccountable authority over democratic administrations might be preventing the finance Ukraine desperately needs.

Empty Promises and Escalating Risks

Politicians promised that these events wouldn’t happen. Previously, a government leader, promoting the largest and riskiest of all these agreements, stated: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this topic accused campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative seemed to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “when companies grasp the authority bestowed upon them, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with widespread derision.

That threat has now materialised. In the current period, energy and mining firms have filed a unprecedented number of claims against nations both wealthy and developing, opposing – similar to the Cumbrian coalmine – government attempts to halt environmental catastrophe. Firms have thus far won one hundred and fourteen billion dollars via ISDS, of which oil majors have obtained the majority. That equates to the combined GDP