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Can you perceive our system of government functions? Perhaps along the lines of this. We elect MPs. They legislate on bills. If a majority is obtained, the bills are enacted as law. The law are enforced by the courts. Simple as that. Yet, that used to be how it used to work. Those days are over.

The Emergence of Secret Courts

Nowadays, international firms, and the billionaires behind them, are able to litigate against elected administrations for the policies they pass, at offshore tribunals made up of corporate lawyers. The cases are conducted in secret. Unlike our courts, these panels provide no right of appeal or oversight by judges. Ordinary citizens are unable to file a case to them, nor can our government, including companies based in this country. The door is open solely for entities registered abroad.

When a secret court rules that a government measure could harm the corporation’s anticipated profits, it may order damages of hundreds of millions of pounds, even billions.

These awards represent not tangible damages but money the tribunal officials determine the company could potentially have made. The government could be forced to abandon its policy. It will be hesitant to enacting future policies of a similar nature, due to the risk of being sued.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being initiated, as firms observe each other, and private equity finance suits in exchange for a cut of the settlements. The result? Democratic sovereignty and popular rule are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the decisions made by legislatures is that this clause has been written – absent public approval, and typically amid an atmosphere of profound opacity – inside trade treaties.

A Concrete Example: The Cumbrian Coalmine

Twelve months ago, activists won a great victory at the senior court. The presiding officer ruled that plans to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have had no impact on national carbon targets. The incoming administration then withdrew the consent the previous administration had granted. Today, this legal outcome could be compromised by an secret arbitration panel reporting to no one but the companies filing the suit.

Last August, a firm whose final controllers reside in the offshore financial centre filed a lawsuit versus the UK government. The previous week a arbitration panel in the US capital was set up to adjudicate on it.

The company is suing the UK for the revenue it would have generated if the mine had been allowed to proceed. Citizens have little idea how much this could amount to. Which individual is acting on its behalf challenging the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The government passes a law, the domestic court validates it, then a foreign company challenges it through an unaccountable offshore tribunal, and a elected official acts on its behalf.

The Russian Challenge

Concurrently that the panel on the coalmine case was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. Details are nothing of the case so far, but it seems likely that he will utilise the tribunal to contest the penalties the UK enacted against him subsequent to the Russian aggression. He has previously initiated proceedings against a small nation on these grounds, seeking a colossal sum: an amount representing half state's yearly budget. Included in the legal team on his side? a prominent lawyer, spouse of the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised Russian assets as guarantee for its financial support package stems from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the finance Ukraine critically depends on.

False Assurances and Escalating Threats

The public was told that these events could not occur. Previously, a senior politician, promoting the most significant and hazardous of all these agreements, declared: “The UK has signed investment treaty after trade deal and there has not been a case in the past.” An adviser on this topic labelled campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries should be concerned by such legal actions. Cautionary notes that “as corporations start to realise the authority bestowed upon them, they will shift their focus from the poorer states to the strong ones” were greeted by widespread derision.

That prediction has come to pass. Recently, oil and gas and mining firms have filed a historic level of suits against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – official measures to stop global warming. Corporations have thus far won vast sums via ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP