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Can you understand our political system works? Maybe along the lines of this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills pass into law. The law is upheld by the courts. Simple as that. However, that used to be how it operated in the past. Those days are over.

The Emergence of Secret Courts

Today, overseas companies, along with the wealthy individuals that control them, have the power to sue nation states for the regulations they pass, at private courts made up of commercial attorneys. The cases take place behind closed doors. In contrast to domestic courts, these bodies allow no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, just as our government, including enterprises headquartered in this country. The door is open solely for entities operating from foreign soil.

When a secret court rules that a law or policy could harm the corporation’s projected profits, it can award damages of hundreds of millions, potentially billions.

These awards are based not on actual losses but funds the panel members decide the company would perhaps have made. The administration might be compelled to rescind the measure. It will be hesitant to passing future laws of a similar nature, for fear of being sued.

A System Spiralling Out of Control

Record numbers of disputes are being initiated, as corporations observe each other, and investment funds bankroll lawsuits for a share of a cut of the awards. The outcome? Democratic sovereignty and democratic governance are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the rulings enacted by legislatures is that this stipulation has been written – without democratic mandate, and often in conditions of total confidentiality – inside international trade agreements.

A Concrete Instance: The UK Coalmine

Last year, environmental campaigners won a great victory at the High Court. The justice determined that proposals to open the first new deep coal mine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had accepted the bizarre claim that the mine could have no consequence on national carbon targets. The new government later cancelled the licence the previous administration had granted. Today, this victory faces being overturned by an secret arbitration panel answering to no one but the companies petitioning it.

In August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit versus the UK government. The previous week a tribunal in Washington DC was established to consider the case.

This firm is seeking compensation from the UK for the money it would have generated if the mine had been allowed to commence operations. We have no clear indication how much this could amount to. Which individual is acting on its behalf challenging the British government? A member of parliament, and ex-law officer in the Conservative government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the national judiciary upholds it, then a overseas corporation contests it through an undemocratic private court, and a elected official acts on its behalf.

A Sanctions Challenge

On the same day that the tribunal on the coal mine dispute was established, it was revealed from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. We know nothing of the case so far, but it seems likely that he may employ the tribunal to contest the sanctions the UK enacted against him after the Russian aggression. He has previously filed a claim against another European state on these grounds, seeking sixteen billion dollars: an amount representing half state's annual revenue. Part of the legal team acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

Trade specialists believe that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its loan to Ukraine is due to concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a trade agreement. This unprecedented, unaccountable authority over democratic administrations could be blocking the funds Ukraine urgently requires.

False Assurances and Growing Risks

Politicians promised that these scenarios were not possible. In 2014, a government leader, promoting the most significant and hazardous of all investment pacts, told us: “The UK has signed trade agreement upon trade deal and there has never been a problem in the past.” An adviser on this matter labelled activists of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries needed to fear such legal actions. Predictions that “once firms start to realise the power they now possess, they will redirect their efforts from the weak nations to the strong ones” were greeted by widespread derision.

That warning is now a reality. Recently, fossil fuel and mining firms have initiated a unprecedented number of suits against nations both wealthy and developing, opposing – like the example of the UK mine – government attempts to halt global warming. Firms have so far won $114bn by using ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP