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Can you reckon our system of government works? Maybe along the lines of this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills become law. The law is upheld by the courts. End of story. Well, that’s how it used to work. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, along with the wealthy individuals behind them, are able to litigate against governments for the regulations they pass, at private courts composed of corporate lawyers. These proceedings take place behind closed doors. Unlike our courts, these tribunals allow no opportunity to appeal or judicial review. The general public are unable to file a case to them, nor can our government, or even companies operating from this country. They are open only to businesses operating from foreign soil.

Should an arbitration panel determines that a government measure might diminish the corporation’s anticipated profits, it may order damages of vast sums, running into billions.

These awards constitute not tangible damages but money the tribunal officials determine the company might otherwise have made. The administration may have to abandon its policy. It becomes hesitant to passing future laws along the same lines, due to the risk of incurring a lawsuit.

A System Growing Exponentially

Record numbers of disputes are being brought, as corporations learn from each other, and investment funds fund legal actions for a share of a portion of the takings. The result? National sovereignty and democratic governance are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede domestic law and the rulings taken by legislatures is that this provision has been incorporated – without public consent, and frequently under an atmosphere of extreme secrecy – within international trade agreements.

A Real-World Case: The Cumbrian Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the senior court. The judge found that plans to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine would have no impact on climate commitments. The incoming administration then withdrew the consent the former government had granted. Today, this success is under threat by an offshore tribunal answering to only the entities bringing the case.

Last August, a firm whose ultimate owners are located in the Cayman Islands filed a lawsuit versus the UK government. The previous week a dispute settlement body in the US capital was established to consider the case.

This firm is suing the UK for the profits it would have generated if the mine had received permission to proceed. Citizens have no clear indication how much this might be. Who is serving as its counsel in opposition to the UK administration? An elected representative, and previous senior legal advisor in the previous government, the self-proclaimed patriot Geoffrey Cox. The government makes a decision, the high court supports it, then a overseas corporation disputes it through an secretive offshore tribunal, and a sitting MP works for its behalf.

An Oligarch's Lawsuit

Concurrently that the tribunal on the coalmine case was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. Details are scarce of the case to date, but it appears probable that he’ll use the tribunal to fight the restrictions the UK enacted against him following the Russian aggression. He has previously filed a claim against Luxembourg for this reason, demanding a colossal sum: equivalent to half of state's annual revenue. Part of the legal team representing him there? a prominent lawyer, wife of the former British prime minister.

International law scholars believe that the EU’s hesitation in using frozen oligarchs' funds as guarantee for its aid for Ukraine stems from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over democratic administrations could be blocking the money Ukraine desperately needs.

False Assurances and Escalating Risks

Politicians promised that these events were not possible. In 2014, a senior politician, promoting the largest and riskiest of all such treaties, declared: “Britain has agreed to trade deal upon trade deal and there has never been a problem in the past.” An adviser on this issue labelled activists of “alarmism … in reality, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear ISDS claims. Warnings that “once firms start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by scepticism.

That warning has come to pass. This year, energy and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, challenging – as in the case of the Whitehaven project – state efforts to stop global warming. Corporations have so far won vast sums via ISDS, of which oil majors have been awarded $84bn. That is equivalent to the combined GDP