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What is your perceive our political system works? Maybe similar to this. Citizens choose MPs. They debate and pass bills. When a majority is secured, the bills pass into law. Statutes is upheld by the courts. That's it. Yet, that was how it used to work. Those days are over.

The Rise of Secret Courts

Nowadays, overseas companies, and the billionaires who own them, are able to litigate against nation states for the laws they pass, at offshore tribunals made up of commercial attorneys. The cases are conducted away from public scrutiny. Differing from national judiciaries, these tribunals provide no avenue for appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even companies operating from this country. They are open exclusively to entities based overseas.

If a tribunal determines that a law or policy may compromise the corporation’s expected profits, it can award compensation of vast sums, even billions.

These sums represent not tangible damages but compensation the arbitrators determine the company might otherwise have made. The administration might be compelled to rescind the measure. It is hesitant to enacting future policies of a similar nature, due to the risk of facing litigation.

A System Growing Exponentially

Historically high figures of legal actions are being brought, as corporations learn from each other, and private equity bankroll lawsuits in return for a share of the takings. The outcome? Democratic sovereignty and democratic governance are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the choices made by elected bodies is that this stipulation has been inserted – without democratic mandate, and often in a climate of extreme secrecy – into bilateral investment treaties.

A Specific Case: The Whitehaven Coalmine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The justice ruled that plans to dig the first new deep coal mine in the UK for three decades, in northwest England, had been wrongly permitted by the outgoing administration, which had accepted the questionable argument that the mine would have no impact on our carbon budgets. The Labour government then withdrew the permission the previous administration had granted. Today, this legal outcome is under threat by an foreign court accountable to only the companies petitioning it.

Last August, a corporate entity whose final controllers reside in the offshore financial centre lodged a claim versus the UK government. Last week a tribunal in Washington DC was convened to hear it.

The claimant is suing the UK for the revenue it could have earned if the mine had been permitted to go ahead. Citizens have no clear indication how much this might be. Which individual is acting on its behalf in opposition to the state? A member of parliament, and ex-law officer in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a international entity disputes it through an undemocratic offshore tribunal, and a sitting MP works for its behalf.

An Oligarch's Case

Concurrently that the tribunal on the coalmine case was convened, information emerged from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know little of the case so far, but it seems likely that he may employ the ISDS mechanism to contest the restrictions the UK imposed on him subsequent to the war in Ukraine. He has already filed a claim against Luxembourg with similar intent, seeking $16bn: half that state's yearly income. Among the counsel acting for him in that case? Cherie Blair, wife of the previous PM.

International law scholars argue that the EU’s delay in using frozen oligarchs' funds as collateral for its financial support package arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over democratic administrations might be preventing the finance Ukraine critically depends on.

Empty Promises and Escalating Costs

The public was told that these events were not possible. In 2014, a government leader, promoting the biggest and most dangerous of all investment pacts, declared: “We’ve signed trade deal after trade deal and we have never seen a issue in the past.” An adviser on this matter described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that only poorer nations should be concerned by these lawsuits. Warnings that “once firms begin to understand the power bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were met with scepticism.

That prediction is now a reality. This year, oil and gas and extraction companies have lodged a unprecedented number of claims against nations rich and poor, challenging – like the example of the UK mine – government attempts to stop environmental catastrophe. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have been awarded $84bn. That is equivalent to the combined GDP