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What is your perceive our democratic process operates? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Legislation is upheld by the courts. End of story. Well, that’s how it used to work. Those days are over.

The Emergence of Secret Courts

In the modern era, foreign corporations, and the wealthy individuals that control them, have the power to sue nation states for the policies they pass, at private courts staffed by business advocates. These proceedings are held behind closed doors. In contrast to domestic courts, these bodies allow no right of appeal or judicial review. Ordinary citizens are unable to file a case to them, just as our government, including businesses headquartered in this country. Access is granted solely for corporations registered abroad.

When a secret court rules that a government measure may compromise the corporation’s anticipated profits, it may order financial penalties of vast sums, even billions.

This compensation constitute not real financial harm but money the tribunal officials decide the company might otherwise have made. The state could be forced to rescind the measure. It will be hesitant to passing future laws along the same lines, for fear of facing litigation.

A Mechanism Running Rampant

Historically high figures of disputes are being initiated, as companies take cues from each other, and private equity fund legal actions for a share of a portion of the awards. The outcome? Democratic sovereignty and popular rule are turning into unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it can supersede national legislation and the choices taken by parliaments is that this stipulation has been written – absent public approval, and typically amid conditions of total confidentiality – within trade treaties.

A Real-World Example: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the High Court. The presiding officer found that proposals to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had endorsed the extraordinary assertion that the mine would have no consequence on national carbon targets. The incoming administration subsequently revoked the consent the Tories had issued. Now, this success could be compromised by an offshore tribunal accountable to no one but the companies bringing the case.

During August, a firm whose final controllers reside in the tax haven filed a lawsuit versus the UK government. The previous week a arbitration panel in the US capital was established to hear it.

The claimant is suing the UK for the profits it would have generated if the mine had received permission to go ahead. The public has no idea how much this sum represents. Who is serving as its counsel challenging the state? An elected representative, and ex-law officer in the previous government, that great patriot Geoffrey Cox. The administration enacts a policy, the domestic court validates it, then a overseas corporation contests it through an secretive arbitration panel, and a sitting MP works for its behalf.

The Russian Case

On the same day that the panel on the coalmine case was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case to date, but it appears probable that he may employ the tribunal to fight the penalties the UK imposed on him subsequent to the invasion of Ukraine. He has already started suing a small nation on these grounds, seeking sixteen billion dollars: half that nation's yearly budget. Included in the counsel acting for him in that case? Cherie Blair, married to the former British prime minister.

International law scholars believe that the EU’s delay in leveraging immobilised oligarchs' funds as guarantee for its financial support package is due to apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This remarkable, secretive influence over elected governments could be blocking the money Ukraine urgently requires.

Empty Promises and Growing Risks

We were assured that such things were not possible. Years ago, a former prime minister, promoting the largest and riskiest of all investment pacts, declared: “The UK has signed trade deal after trade deal and there has never been a problem in the past.” An expert on this issue described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states had to worry about these lawsuits. Cautionary notes that “when companies grasp the power bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with general mockery.

That prediction has come to pass. This year, oil and gas and mining firms have lodged a record number of claims against nations both wealthy and developing, contesting – as in the case of the Cumbrian coalmine – government attempts to halt environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP