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How do you perceive our democratic process works? It could be along the lines of this. Citizens choose MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. End of story. However, that used to be how it once functioned. No longer.

The Emergence of Secret Courts

Nowadays, overseas companies, along with the wealthy individuals behind them, are able to litigate against governments for the policies they pass, at private courts composed of business advocates. The cases are held away from public scrutiny. In contrast to domestic courts, these tribunals allow no avenue for appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, or even companies based in this country. They are open only to corporations based overseas.

Should an arbitration panel rules that a legislative action may compromise the corporation’s expected profits, it can award compensation of hundreds of millions, even billions.

These sums are based not on real financial harm but money the arbitrators determine the company could potentially have made. The administration might be compelled to abandon its policy. It will be hesitant to introducing similar legislation in that area, for fear of facing litigation.

A Process Growing Exponentially

Unprecedented levels of legal actions are being initiated, as companies take cues from each other, and investment funds finance suits in return for a portion of the takings. The result? National sovereignty and democratic governance are now too costly.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the decisions enacted by legislatures is that this stipulation has been written – absent public approval, and frequently under conditions of total confidentiality – within trade treaties.

A Real-World Instance: The Cumbrian Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The judge ruled that schemes to open the first deep coalmine in the UK for 30 years, in northwest England, were unlawfully approved by the Conservative government, which had endorsed the questionable argument that the mine would have zero effect on our carbon budgets. The Labour government subsequently revoked the permission the former government had approved. Today, this victory is under threat by an foreign court accountable to only the entities petitioning it.

During August, a corporate entity whose final controllers are located in the offshore financial centre initiated proceedings versus the UK government. Recently a dispute settlement body in the US capital was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had received permission to go ahead. Citizens have little idea how much this could amount to. Which individual is serving as its counsel challenging the UK administration? A member of parliament, and former attorney-general in the previous government, the noted patriot Sir Geoffrey Cox. The administration enacts a policy, the high court upholds it, then a international entity contests it through an secretive private court, and a elected official acts on its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the coalmine case was appointed, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. Details are little of the case so far, but it seems likely that he’ll use the ISDS mechanism to contest the sanctions the UK enacted against him subsequent to the invasion of Ukraine. He has filed a claim against another European state with similar intent, seeking a colossal sum: an amount representing half nation's yearly budget. Among the lawyers acting for him in that case? the wife of a former prime minister, spouse of the former British prime minister.

Trade specialists contend that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its financial support package arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, secretive influence over sovereign states might be preventing the funds Ukraine desperately needs.

False Assurances and Escalating Threats

We were assured that these scenarios wouldn’t happen. Previously, a government leader, advocating for the biggest and most dangerous of all these agreements, stated: “Britain has agreed to investment treaty upon trade deal and there has never been a case in the past.” A consultant on this topic accused critics of “alarmism … in reality, ISDS barely touches the UK much”. The general impression was crafted to be that only poorer nations had to worry about ISDS claims. Warnings that “as corporations begin to understand the authority bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were met with general mockery.

That prediction is now a reality. This year, energy and resource corporations have initiated a historic level of claims against nations rich and poor, opposing – similar to the Cumbrian coalmine – state efforts to stop global warming. Corporations have so far won vast sums through ISDS, of which oil majors have secured the majority. That equates to the combined GDP