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How do you perceive our political system works? It could be along the lines of this. Citizens choose MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. Legislation is maintained by the courts. End of story. However, that’s how it operated in the past. No longer.

The Rise of Secret Courts

In the modern era, foreign corporations, and the oligarchs who own them, can sue nation states for the policies they pass, at private courts made up of corporate lawyers. Such disputes take place in secret. Unlike our courts, these bodies grant no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, or even companies operating from this country. The door is open solely for businesses registered abroad.

If a tribunal finds that a law or policy could harm the corporation’s expected profits, it has the power to grant compensation of hundreds of millions, even billions.

This compensation are based not on tangible damages but compensation the panel members decide the company might otherwise have made. The administration might be compelled to drop the legislation. It is hesitant to enacting future policies in that area, worried about being sued.

A System Running Rampant

Historically high figures of legal actions are being brought, as firms learn from each other, and investment funds finance suits for a share of a portion of the takings. The result? National sovereignty and democratic governance are turning into unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede national legislation and the decisions taken by elected bodies is that this provision has been written – without public consent, and typically amid a climate of total confidentiality – within bilateral investment treaties.

A Real-World Case: The Cumbrian Coalmine

A year ago, activists achieved a major legal triumph at the senior court. The judge ruled that proposals to open the first new deep coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had endorsed the extraordinary assertion that the mine could have no consequence on climate commitments. The incoming administration later cancelled the licence the previous administration had issued. Today, this success faces being overturned by an offshore tribunal reporting to exclusively the entities bringing the case.

In August, a corporate entity whose final controllers are located in the Cayman Islands lodged a claim versus the UK government. Last week a arbitration panel in the US capital was set up to hear it.

The claimant is suing the UK for the revenue it could have earned if the mine had been permitted to go ahead. We have no clear indication how much this sum represents. What legal team is serving as its counsel against the British government? A sitting MP, and ex-law officer in the outgoing administration, the noted patriot the MP. The government makes a decision, the domestic court supports it, then a foreign company contests it through an secretive private court, and a member of our parliament represents its behalf.

An Oligarch's Challenge

Simultaneously that the panel on the coalmine case was established, we learned from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case to date, but it appears probable that he’ll use the tribunal to fight the sanctions the UK levied against him following the Russian aggression. He has previously filed a claim against a small nation for this reason, demanding sixteen billion dollars: half that government’s yearly budget. Part of the legal team acting for him in that case? Cherie Blair, wife of the former British prime minister.

International law scholars contend that the EU’s delay in using frozen Russian assets as guarantee for its loan to Ukraine is due to concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the finance Ukraine urgently requires.

Empty Promises and Growing Costs

We were assured that these scenarios could not occur. Previously, a government leader, promoting the most significant and hazardous of all investment pacts, stated: “The UK has signed trade deal upon trade deal and there has not been a case in the past.” An expert on this matter accused campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that solely developing countries had to worry about such legal actions. Warnings that “as corporations grasp the influence bestowed upon them, they will turn their attention from the weak nations to the developed economies” were greeted by scepticism.

That prediction has now materialised. This year, oil and gas and extraction companies have filed a record number of suits against nations both wealthy and developing, contesting – similar to the Whitehaven project – government attempts to halt climate breakdown. Corporations have thus far won $114bn via ISDS, of which oil majors have obtained the majority. That represents the combined GDP