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How do you understand our democratic process operates? Maybe something like this. Citizens choose MPs. They debate and pass bills. If a majority is secured, the bills pass into law. Legislation is upheld by the courts. End of story. Well, that was how it used to work. No longer.

The Rise of Secret Courts

In the modern era, overseas companies, along with the oligarchs who own them, are able to litigate against nation states for the laws they pass, at offshore tribunals made up of business advocates. These proceedings are held behind closed doors. In contrast to domestic courts, these tribunals provide no opportunity to appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even enterprises headquartered in this country. The door is open only to corporations based overseas.

When a secret court rules that a legislative action may compromise the corporation’s projected profits, it can award damages of vast sums, running into billions.

These sums constitute not tangible damages but funds the tribunal officials decide the company might otherwise have made. The administration might be compelled to abandon its policy. It becomes deterred from enacting future policies of a similar nature, worried about facing litigation.

A Mechanism Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as firms observe each other, and investment funds finance suits in return for a cut of the takings. The consequence? Sovereignty and popular rule are becoming too costly.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to override domestic law and the decisions made by legislatures is that this provision has been written – without public consent, and often in conditions of total confidentiality – into international trade agreements.

A Specific Example: The Whitehaven Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The justice ruled that schemes to open the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had endorsed the extraordinary assertion that the mine would have had zero effect on climate commitments. The incoming administration later cancelled the consent the previous administration had approved. Currently, this legal outcome could be compromised by an secret arbitration panel reporting to exclusively the companies petitioning it.

Last August, a firm whose ultimate owners are based in the offshore financial centre initiated proceedings versus the UK government. Recently a tribunal in Washington DC was convened to adjudicate on it.

The claimant is litigating against the UK for the revenue it would have generated if the mine had been allowed to proceed. The public has no clear indication how much this could amount to. What legal team is representing it challenging the state? A member of parliament, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The administration makes a decision, the national judiciary validates it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a member of our parliament works for its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the mining lawsuit was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case to date, but it is highly possible that he may employ the tribunal to contest the restrictions the UK enacted against him after the war in Ukraine. He has initiated proceedings against Luxembourg for this reason, demanding a colossal sum: half that government’s annual revenue. Included in the lawyers representing him there? the wife of a former prime minister, wife of the former British prime minister.

Trade specialists believe that the EU’s delay in using frozen Russian assets as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states might be preventing the money Ukraine urgently requires.

False Assurances and Escalating Risks

The public was told that such things could not occur. Years ago, a senior politician, championing the largest and riskiest of all investment pacts, stated: “The UK has signed trade deal after trade deal and we have never seen a problem in the past.” A consultant on this topic accused activists of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries had to worry about such legal actions. Warnings that “as corporations begin to understand the power bestowed upon them, they will turn their attention from the poorer states to the developed economies” were greeted by scepticism.

That threat has now materialised. In the current period, fossil fuel and resource corporations have lodged a record number of cases against nations rich and poor, opposing – similar to the UK mine – official measures to stop climate breakdown. Companies have so far won $114bn through ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP