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Can you reckon our democratic process functions? It could be similar to this. Citizens choose MPs. They vote on bills. If a majority is secured, the bills become law. Legislation is upheld by the courts. That's it. Well, that used to be how it operated in the past. Those days are over.

The Advent of Secret Tribunals

In the modern era, overseas companies, along with the billionaires who own them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels staffed by corporate lawyers. The cases take place behind closed doors. In contrast to domestic courts, these panels grant no right of appeal or oversight by judges. The general public are unable to file a case to them, just as our government, or even businesses based in this country. Access is granted exclusively to corporations operating from foreign soil.

When a secret court determines that a law or policy might diminish the corporation’s projected profits, it can award damages of hundreds of millions of pounds, potentially billions.

These sums are based not on tangible damages but funds the tribunal officials determine the company would perhaps have made. The government could be forced to abandon its policy. It becomes hesitant to enacting future policies of a similar nature, due to the risk of being sued.

A Process Running Rampant

Historically high figures of legal actions are being filed, as companies take cues from each other, and investment funds bankroll lawsuits in return for a share of the settlements. The outcome? Democratic sovereignty and democracy are becoming prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the choices taken by legislatures is that this clause has been written – without democratic mandate, and often in conditions of extreme secrecy – within bilateral investment treaties.

A Concrete Example: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners won a great victory at the high court. The judge determined that schemes to excavate the first major coal mine in the UK for 30 years, in northwest England, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have zero effect on our carbon budgets. The new government later cancelled the permission the previous administration had approved. Currently, this victory is under threat by an offshore tribunal reporting to only the entities bringing the case.

During August, a firm whose beneficial owners reside in the tax haven lodged a claim versus the UK government. The previous week a arbitration panel in the US capital was convened to consider the case.

The claimant is suing the UK for the money it would have generated if the mine had been allowed to go ahead. Citizens have little idea how much this could amount to. Which individual is representing it challenging the UK administration? An elected representative, and ex-law officer in the Conservative government, the noted patriot Sir Geoffrey Cox. The state passes a law, the national judiciary upholds it, then a international entity challenges it through an unaccountable private court, and a elected official acts on its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the mining lawsuit was convened, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case so far, but it is highly possible that he’ll use the ISDS mechanism to contest the sanctions the UK imposed on him after the Russian aggression. He has previously initiated proceedings against a small nation with similar intent, claiming $16bn: equivalent to half of government’s yearly income. Included in the counsel acting for him in that case? a prominent lawyer, spouse of the former British prime minister.

International law scholars contend that the EU’s hesitation in utilising seized Russian assets as security for its aid for Ukraine stems from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, secretive influence over elected governments may be obstructing the finance Ukraine urgently requires.

Empty Promises and Growing Costs

The public was told that these scenarios wouldn’t happen. Years ago, a government leader, advocating for the most significant and hazardous of all these agreements, stated: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” An adviser on this topic labelled activists of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries needed to fear such legal actions. Cautionary notes that “as corporations start to realise the authority they now possess, they will turn their attention from the weak nations to the strong ones” were greeted by general mockery.

That prediction is now a reality. In the current period, oil and gas and extraction companies have lodged a historic level of cases against nations both wealthy and developing, contesting – like the example of the Whitehaven project – government attempts to stop environmental catastrophe. Corporations have so far won vast sums via ISDS, of which fossil fuel companies have been awarded the majority. That represents the combined GDP