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How do you reckon our system of government works? Maybe something like this. We elect MPs. They debate and pass bills. If a majority is obtained, the bills pass into law. Statutes are enforced by the courts. That's it. Yet, that was how it once functioned. Those days are over.

The Emergence of Secret Courts

In the modern era, international firms, and the oligarchs behind them, can sue elected administrations for the policies they pass, at offshore tribunals staffed by commercial attorneys. The cases take place away from public scrutiny. Differing from national judiciaries, these panels grant no right of appeal or judicial review. The general public are unable to file a case to them, nor can our government, or even enterprises operating from this country. The door is open solely for businesses based overseas.

Should an arbitration panel determines that a law or policy may compromise the corporation’s projected profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

These sums represent not actual losses but money the tribunal officials decide the company could potentially have made. The state may have to abandon its policy. It will be hesitant to passing future laws of a similar nature, for fear of being sued.

A Mechanism Spiralling Out of Control

Record numbers of legal actions are being brought, as firms take cues from each other, and hedge funds finance suits in return for a cut of the takings. The result? Democratic sovereignty and popular rule are now prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to override national legislation and the decisions enacted by legislatures is that this clause has been incorporated – without public consent, and often in a climate of profound opacity – into international trade agreements.

A Concrete Case: The Cumbrian Coal Mine

A year ago, environmental campaigners secured a significant win at the High Court. The judge ruled that proposals to dig the first major coal mine in the UK for three decades, in northwest England, were illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine would have had no impact on national carbon targets. The Labour government later cancelled the consent the former government had issued. Today, this victory faces being overturned by an secret arbitration panel reporting to exclusively the corporations petitioning it.

During August, a firm whose ultimate owners are based in the tax haven lodged a claim versus the UK government. Recently a tribunal in the United States was established to hear it.

This firm is litigating against the UK for the money it could have earned if the mine had been permitted to go ahead. We have little idea how much this could amount to. Who is representing it in opposition to the UK administration? An elected representative, and former attorney-general in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the high court supports it, then a foreign company contests it through an secretive private court, and a elected official works for its behalf.

The Russian Challenge

On the same day that the tribunal on the coal mine dispute was established, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. We know little of the case at present, but it seems likely that he may employ the ISDS mechanism to challenge the restrictions the UK levied against him following the Russian aggression. He has already initiated proceedings against a small nation on these grounds, demanding sixteen billion dollars: an amount representing half state's yearly income. Part of the counsel acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists contend that the EU’s procrastination in leveraging immobilised state funds as collateral for its financial support package stems from apprehension in Brussels that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, secretive influence over elected governments may be obstructing the money Ukraine urgently requires.

Empty Promises and Growing Risks

The public was told that these events could not occur. In 2014, a senior politician, advocating for the biggest and most dangerous of all investment pacts, stated: “We’ve signed trade agreement after trade deal and we have never seen a issue in the past.” An expert on this matter labelled campaigners of “scaremongering … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states should be concerned by such legal actions. Cautionary notes that “when companies begin to understand the authority they’ve been granted, they will turn their attention from the weak nations to the wealthy nations” were dismissed with scepticism.

That warning is now a reality. Recently, energy and resource corporations have filed a record number of suits against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – government attempts to prevent environmental catastrophe. Companies have so far won $114bn via ISDS, of which oil majors have obtained the majority. That represents the combined GDP