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What is your understand our political system works? Perhaps along the lines of this. We elect MPs. They legislate on bills. If a majority is secured, the bills become law. Statutes are enforced by the courts. End of story. Well, that was how it used to work. No longer.

The Rise of Secret Courts

Nowadays, international firms, and the oligarchs that control them, are able to litigate against nation states for the policies they pass, at private courts made up of commercial attorneys. These proceedings are conducted behind closed doors. Differing from national judiciaries, these bodies allow no right of appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, or even businesses headquartered in this country. The door is open solely for corporations based overseas.

If a tribunal determines that a legislative action may compromise the corporation’s projected profits, it can award financial penalties of hundreds of millions of pounds, running into billions.

These awards are based not on real financial harm but compensation the arbitrators conclude the company could potentially have made. The government could be forced to rescind the measure. It becomes deterred from passing future laws of a similar nature, for fear of being sued.

A Process Growing Exponentially

Record numbers of legal actions are being initiated, as firms take cues from each other, and investment funds finance suits in exchange for a share of the settlements. The result? Sovereignty and democratic governance are becoming unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the rulings taken by legislatures is that this provision has been written – without democratic mandate, and frequently under conditions of extreme secrecy – within trade treaties.

A Specific Example: The Cumbrian Coal Mine

Last year, environmental campaigners achieved a major legal triumph at the high court. The judge determined that plans to dig the first new deep coal mine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the previous government, which had endorsed the bizarre claim that the mine could have zero effect on climate commitments. The Labour government later cancelled the consent the Tories had approved. Currently, this legal outcome could be compromised by an secret arbitration panel answering to only the entities petitioning it.

Last August, a company whose ultimate owners are located in the Cayman Islands initiated proceedings versus the UK government. The previous week a arbitration panel in the US capital was set up to consider the case.

The company is litigating against the UK for the money it might have made if the mine had been permitted to proceed. Citizens have no clear indication how much this might be. What legal team is representing it against the British government? A sitting MP, and former attorney-general in the outgoing administration, that great patriot Geoffrey Cox. The government enacts a policy, the high court supports it, then a overseas corporation challenges it through an secretive arbitration panel, and a member of our parliament works for its behalf.

An Oligarch's Case

Concurrently that the panel on the coal mine dispute was established, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are nothing of the case at present, but it is highly possible that he may employ the ISDS mechanism to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has filed a claim against another European state with similar intent, seeking sixteen billion dollars: half that nation's yearly budget. Included in the legal team representing him there? a prominent lawyer, married to the ex-UK leader.

Legal experts believe that the EU’s procrastination in using frozen Russian assets as guarantee for its financial support package arises from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This remarkable, secretive influence over sovereign states may be obstructing the money Ukraine critically depends on.

False Assurances and Mounting Risks

Politicians promised that these events wouldn’t happen. In 2014, a government leader, promoting the most significant and hazardous of all investment pacts, told us: “We’ve signed investment treaty after trade deal and we have never seen a problem in the past.” An expert on this topic labelled activists of “alarmism … the fact is, ISDS barely touches the UK much”. The overall message appeared to be that solely developing countries had to worry about these lawsuits. Warnings that “when companies begin to understand the authority they’ve been granted, they will turn their attention from the weak nations to the developed economies” were dismissed with general mockery.

That prediction is now a reality. Recently, fossil fuel and resource corporations have lodged a record number of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – official measures to stop global warming. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That equates to the combined GDP