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What is your reckon our political system operates? Perhaps similar to this. The public votes for MPs. They vote on bills. When a majority is secured, the bills become law. The law is maintained by the courts. That's it. Yet, that was how it used to work. Not anymore.

The Emergence of Secret Courts

Today, international firms, or the billionaires that control them, are able to litigate against nation states for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases take place in secret. Differing from national judiciaries, these bodies grant no avenue for appeal or judicial review. The general public are unable to file a case to them, just as our government, including businesses headquartered in this country. They are open exclusively to corporations registered abroad.

Should an arbitration panel rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant compensation of vast sums, even billions.

These awards constitute not tangible damages but money the panel members determine the company might otherwise have made. The administration may have to rescind the measure. It will be discouraged from enacting future policies of a similar nature, for fear of facing litigation.

A System Spiralling Out of Control

Record numbers of legal actions are being brought, as corporations take cues from each other, and private equity fund legal actions in return for a share of the settlements. The result? National sovereignty and democratic governance are now prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override national legislation and the decisions enacted by parliaments is that this provision has been incorporated – without public consent, and often in an atmosphere of profound opacity – within trade treaties.

A Specific Case: The Whitehaven Coalmine

Last year, activists won a great victory at the senior court. The justice determined that plans to dig the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine could have no consequence on climate commitments. The Labour government subsequently revoked the permission the Tories had issued. Now, this victory could be compromised by an foreign court reporting to exclusively the companies filing the suit.

Last August, a corporate entity whose final controllers are based in the offshore financial centre initiated proceedings versus the UK government. The previous week a dispute settlement body in Washington DC was convened to adjudicate on it.

This firm is suing the UK for the money it might have made if the mine had been permitted to commence operations. The public has no idea how much this might be. What legal team is representing it challenging the UK administration? An elected representative, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a member of our parliament represents its behalf.

An Oligarch's Case

Concurrently that the tribunal on the coalmine case was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. We know little of the case to date, but it is highly possible that he may employ the tribunal to challenge the restrictions the UK levied against him following the invasion of Ukraine. He has already initiated proceedings against another European state on these grounds, claiming sixteen billion dollars: an amount representing half state's annual revenue. Included in the counsel representing him there? the wife of a former prime minister, spouse of the previous PM.

Legal experts argue that the EU’s procrastination in using frozen state funds as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This remarkable, secretive influence over sovereign states could be blocking the money Ukraine desperately needs.

Empty Promises and Escalating Risks

We were assured that such things wouldn’t happen. Previously, a government leader, advocating for the most significant and hazardous of all these agreements, stated: “We’ve signed trade agreement upon trade deal and there has never been a problem in the past.” An expert on this issue accused campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The general impression appeared to be that exclusively weaker states had to worry about such legal actions. Warnings that “once firms start to realise the power they’ve been granted, they will turn their attention from the weak nations to the strong ones” were met with widespread derision.

That warning is now a reality. Recently, energy and mining firms have filed a historic level of cases against nations across the economic spectrum, opposing – like the example of the Whitehaven project – government attempts to halt climate breakdown. Firms have to date won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP