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How do you perceive our system of government functions? It could be along the lines of this. The public votes for MPs. They vote on bills. Should a majority is achieved, the bills become law. The law is upheld by the courts. End of story. Well, that was how it once functioned. No longer.

The Advent of Secret Courts

Today, overseas companies, and the oligarchs behind them, are able to litigate against governments for the laws they pass, at offshore tribunals composed of commercial attorneys. These proceedings are held away from public scrutiny. Differing from national judiciaries, these bodies provide no right of appeal or oversight by judges. You or I are unable to file a case to them, and neither can our government, or even businesses headquartered in this country. They are open exclusively to corporations based overseas.

If a tribunal determines that a legislative action might diminish the corporation’s anticipated profits, it can award compensation of hundreds of millions of pounds, running into billions.

These awards constitute not real financial harm but funds the panel members determine the company would perhaps have made. The state might be compelled to abandon its policy. It is hesitant to passing future laws along the same lines, for fear of facing litigation.

A Process Spiralling Out of Control

Historically high figures of legal actions are being filed, as companies observe each other, and private equity fund legal actions for a share of a share of the takings. The result? Democratic sovereignty and popular rule are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump national legislation and the choices taken by elected bodies is that this stipulation has been incorporated – without democratic mandate, and typically amid conditions of extreme secrecy – within trade treaties.

A Concrete Example: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the senior court. The judge determined that plans to dig the first deep coalmine in the UK for a generation, in northwest England, had been illegally sanctioned by the outgoing administration, which had endorsed the extraordinary assertion that the mine would have had no consequence on national carbon targets. The new government subsequently revoked the licence the Tories had issued. Today, this success is under threat by an secret arbitration panel accountable to exclusively the entities petitioning it.

During August, a corporate entity whose ultimate owners are located in the tax haven lodged a claim against the UK government. Last week a dispute settlement body in the US capital was set up to adjudicate on it.

The company is litigating against the UK for the money it would have generated if the mine had been allowed to proceed. The public has no idea how much this could amount to. Who is acting on its behalf against the British government? A sitting MP, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The administration makes a decision, the national judiciary supports it, then a foreign company challenges it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Challenge

Simultaneously that the panel on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. The public knows scarce of the case so far, but it appears probable that he may employ the arbitration process to fight the restrictions the UK imposed on him subsequent to the war in Ukraine. He has already started suing another European state for this reason, claiming a colossal sum: half that state's yearly income. Among the lawyers representing him there? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s procrastination in utilising seized oligarchs' funds as collateral for its financial support package stems from concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states might be preventing the money Ukraine urgently requires.

Empty Promises and Escalating Risks

We were assured that these scenarios were not possible. In 2014, a former prime minister, promoting the biggest and most dangerous of all investment pacts, told us: “Britain has agreed to trade agreement upon trade deal and there has not been a problem in the past.” An expert on this topic accused campaigners of “exaggeration … in reality, ISDS barely touches the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by such legal actions. Predictions that “once firms grasp the authority they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were greeted by widespread derision.

That prediction is now a reality. This year, energy and extraction companies have filed a record number of cases against nations across the economic spectrum, contesting – similar to the UK mine – state efforts to prevent environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which oil majors have been awarded $84bn. That is equivalent to the combined GDP