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Can you perceive our political system operates? It could be similar to this. The public votes for MPs. They legislate on bills. When a majority is obtained, the bills are enacted as law. Legislation is upheld by the courts. Simple as that. Well, that used to be how it once functioned. Not anymore.

The Advent of Secret Tribunals

Today, overseas companies, and the oligarchs behind them, are able to litigate against elected administrations for the policies they pass, at secret arbitration panels composed of business advocates. The cases take place behind closed doors. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, including companies headquartered in this country. Access is granted only to businesses based overseas.

When a secret court finds that a legislative action may compromise the corporation’s projected profits, it has the power to grant damages of hundreds of millions of pounds, potentially billions.

These awards represent not real financial harm but compensation the arbitrators decide the company could potentially have made. The state might be compelled to drop the legislation. It is hesitant to introducing similar legislation in that area, due to the risk of facing litigation.

A System Growing Exponentially

Historically high figures of cases are being filed, as companies learn from each other, and private equity bankroll lawsuits in return for a cut of the awards. The consequence? Democratic sovereignty and democracy are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the rulings taken by parliaments is that this provision has been inserted – without democratic mandate, and typically amid conditions of total confidentiality – inside international trade agreements.

A Concrete Case: The UK Coalmine

Last year, a conservation group secured a significant win at the senior court. The justice determined that schemes to excavate the first deep coalmine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine could have no impact on our carbon budgets. The incoming administration then withdrew the permission the Tories had approved. Now, this success is under threat by an secret arbitration panel accountable to exclusively the companies bringing the case.

During August, a firm whose final controllers reside in the Cayman Islands filed a lawsuit against the UK government. The previous week a dispute settlement body in the US capital was set up to consider the case.

The claimant is litigating against the UK for the profits it would have generated if the mine had been allowed to go ahead. Citizens have no clear indication how much this sum represents. Who is acting on its behalf in opposition to the state? A member of parliament, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The administration makes a decision, the domestic court upholds it, then a foreign company disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

A Sanctions Case

Simultaneously that the court on the coalmine case was appointed, we learned from a parliamentary answer that the UK is also being sued 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 arbitration process to contest the sanctions the UK imposed on him after the invasion of Ukraine. He has initiated proceedings against another European state for this reason, seeking $16bn: equivalent to half of state's yearly income. Part of the counsel representing him there? the wife of a former prime minister, married to the former British prime minister.

Trade specialists argue that the EU’s delay in leveraging immobilised state funds as collateral for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over elected governments may be obstructing the finance Ukraine urgently requires.

False Assurances and Mounting Threats

The public was told that these scenarios could not occur. Previously, a government leader, promoting the biggest and most dangerous of all such treaties, told us: “Britain has agreed to trade agreement after trade deal and we have never seen a issue in the past.” An expert on this topic labelled campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “once firms grasp the influence they now possess, they will redirect their efforts from the weak nations to the developed economies” were greeted by widespread derision.

That prediction is now a reality. Recently, oil and gas and mining firms have lodged a unprecedented number of cases against nations across the economic spectrum, opposing – similar to the UK mine – state efforts to prevent environmental catastrophe. Companies have so far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained the majority. That represents the combined GDP