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Can you understand our political system operates? It could be along the lines of this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills become law. Legislation are enforced by the courts. Simple as that. Yet, that was how it used to work. No longer.

The Rise of Secret Courts

In the modern era, international firms, along with the billionaires who own them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals made up of business advocates. Such disputes are held in secret. Differing from national judiciaries, these panels allow no right of appeal or oversight by judges. Ordinary citizens are unable to file a case to them, just as our government, or even businesses operating from this country. They are open solely for businesses registered abroad.

When a secret court determines that a legislative action may compromise the corporation’s projected profits, it can award damages of hundreds of millions of pounds, even billions.

This compensation represent not real financial harm but money the tribunal officials conclude the company might otherwise have made. The government might be compelled to abandon its policy. It is discouraged from passing future laws of a similar nature, due to the risk of incurring a lawsuit.

A System Spiralling Out of Control

Historically high figures of disputes are being brought, as corporations observe each other, and investment funds finance suits in exchange for a cut of the awards. The result? Sovereignty and democracy are turning into too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the decisions enacted by legislatures is that this stipulation has been written – without democratic mandate, and often in a climate of total confidentiality – into bilateral investment treaties.

A Specific Example: The UK Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The presiding officer ruled that schemes to excavate the first major coal mine in the UK for three decades, in northwest England, had been wrongly permitted by the Conservative government, which had endorsed the bizarre claim that the mine would have no consequence on national carbon targets. The Labour government later cancelled the permission the Tories had issued. Now, this legal outcome could be compromised by an offshore tribunal reporting to exclusively the corporations petitioning it.

In August, a corporate entity whose final controllers are located in the offshore financial centre initiated proceedings challenging the UK government. Recently a tribunal in the US capital was established to adjudicate on it.

The company is suing the UK for the revenue it could have earned if the mine had received permission to proceed. The public has no idea how much this might be. Which individual is serving as its counsel challenging the state? A sitting MP, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The government passes a law, the high court upholds it, then a international entity disputes it through an undemocratic arbitration panel, and a member of our parliament acts on its behalf.

The Russian Challenge

Simultaneously that the tribunal on the coal mine dispute was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. We know scarce of the case at present, but it is highly possible that he’ll use the arbitration process to challenge the restrictions the UK levied against him subsequent to the Russian aggression. He has filed a claim against Luxembourg on these grounds, claiming a colossal sum: half that nation's yearly budget. Among the legal team representing him there? the wife of a former prime minister, married to the ex-UK leader.

Legal experts believe that the EU’s delay in leveraging immobilised state funds as guarantee for its loan to Ukraine stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, unaccountable authority over democratic administrations might be preventing the funds Ukraine critically depends on.

Misleading Claims and Mounting Threats

Politicians promised that such things were not possible. Previously, a government leader, championing the most significant and hazardous of all such treaties, told us: “The UK has signed trade deal after trade deal and we have never seen a issue in the past.” An adviser on this topic accused critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by ISDS claims. Cautionary notes that “as corporations grasp the power they’ve been granted, they will redirect their efforts from the poorer states to the strong ones” were met with widespread derision.

That prediction has now materialised. This year, fossil fuel and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – official measures to prevent environmental catastrophe. Corporations have so far won $114bn via ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP