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How do you perceive our political system functions? It could be similar to this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. Legislation are enforced by the courts. That's it. However, that was how it once functioned. Not anymore.

The Advent of Secret Courts

Today, international firms, along with the wealthy individuals that control them, have the power to sue governments for the regulations they pass, at offshore tribunals composed of corporate lawyers. The cases take place away from public scrutiny. Unlike our courts, these panels provide no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, including businesses headquartered in this country. They are open only to corporations operating from foreign soil.

When a secret court finds that a legislative action might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, running into billions.

This compensation constitute not tangible damages but funds the arbitrators decide the company could potentially have made. The government might be compelled to abandon its policy. It becomes deterred from introducing similar legislation along the same lines, due to the risk of being sued.

A Process Spiralling Out of Control

Record numbers of disputes are being filed, as firms observe each other, and investment funds bankroll lawsuits in return for a portion of the settlements. The result? National sovereignty and democratic governance are turning into prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump a country's own laws and the rulings taken by parliaments is that this stipulation has been written – absent public approval, and often in an atmosphere of extreme secrecy – inside international trade agreements.

A Specific Example: The Cumbrian Coal Mine

Twelve months ago, activists won a great victory at the high court. The judge determined that plans to dig the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the bizarre claim that the mine would have had no consequence on our carbon budgets. The incoming administration later cancelled the consent the Tories had issued. Now, this victory could be compromised by an offshore tribunal accountable to no one but the entities bringing the case.

Last August, a company whose ultimate owners are located in the tax haven filed a lawsuit challenging the UK government. Recently a dispute settlement body in the US capital was convened to hear it.

The claimant is litigating against the UK for the profits it could have earned if the mine had been allowed to go ahead. Citizens have no idea how much this might be. What legal team is acting on its behalf challenging the state? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration makes a decision, the domestic court validates it, then a foreign company disputes it through an unaccountable offshore tribunal, and a sitting MP represents its behalf.

A Sanctions Lawsuit

Simultaneously that the panel on the coalmine case was appointed, we learned from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. Details are nothing of the case so far, but it is highly possible that he’ll use the ISDS mechanism to challenge the sanctions the UK enacted against him subsequent to the Russian aggression. He has started suing Luxembourg for this reason, claiming a colossal sum: half that state's yearly income. Included in the lawyers representing him there? the wife of a former prime minister, wife of the previous PM.

International law scholars argue that the EU’s procrastination in using frozen oligarchs' funds as security for its financial support package stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over elected governments could be blocking the finance Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that these events were not possible. Years ago, a senior politician, promoting the most significant and hazardous of all these agreements, told us: “The UK has signed investment treaty after trade deal and there has not been a issue in the past.” An adviser on this topic accused critics of “exaggeration … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states needed to fear such legal actions. Warnings that “once firms grasp the authority they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were dismissed with scepticism.

That threat has now materialised. Recently, fossil fuel and resource corporations have filed a historic level of cases against nations both wealthy and developing, opposing – like the example of the Whitehaven project – government attempts to stop global warming. Corporations have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured the majority. That equates to the combined GDP