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What is your understand our democratic process operates? Perhaps along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is secured, the bills pass into law. Statutes are enforced by the courts. End of story. Well, that used to be how it operated in the past. Not anymore.

The Rise of Secret Courts

Nowadays, foreign corporations, along with the wealthy individuals who own them, can sue governments for the regulations they pass, at private courts made up of business advocates. The cases take place behind closed doors. Unlike our courts, these tribunals grant no right of appeal or legal review. You or I cannot take a case to them, just as our government, or even enterprises headquartered in this country. The door is open solely for entities registered abroad.

If a tribunal rules that a law or policy may compromise the corporation’s expected profits, it may order financial penalties of hundreds of millions, running into billions.

These sums are based not on tangible damages but funds the arbitrators determine the company would perhaps have made. The administration could be forced to rescind the measure. It will be deterred from passing future laws in that area, for fear of incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of disputes are being brought, as corporations take cues from each other, and hedge funds finance suits in exchange for a share of the awards. The consequence? Sovereignty and democratic governance are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can supersede a country's own laws and the rulings made by legislatures is that this stipulation has been written – absent public approval, and frequently under a climate of extreme secrecy – within bilateral investment treaties.

A Real-World Case: The Cumbrian Coal Mine

A year ago, activists achieved a major legal triumph at the High Court. The judge found that schemes to dig the first deep coalmine in the UK for a generation, in Cumbria, were illegally sanctioned by the outgoing administration, which had endorsed the questionable argument that the mine could have no impact on our carbon budgets. The new government then withdrew the permission the Tories had approved. Currently, this victory is under threat by an foreign court answering to exclusively the companies filing the suit.

Last August, a firm whose beneficial owners are located in the Cayman Islands lodged a claim versus the UK government. Last week a tribunal in the US capital was convened to hear it.

The company is litigating against the UK for the profits it might have made if the mine had been allowed to go ahead. Citizens have little idea how much this could amount to. What legal team is acting on its behalf challenging the UK administration? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot the MP. The government makes a decision, the national judiciary validates it, then a overseas corporation challenges it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the mining lawsuit was convened, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. We know scarce of the case so far, but it appears probable that he’ll use the arbitration process to fight the penalties the UK enacted against him subsequent to the Russian aggression. He has previously initiated proceedings against Luxembourg with similar intent, seeking $16bn: half that state's yearly income. Part of the counsel representing him there? Cherie Blair, spouse of the former British prime minister.

Trade specialists argue that the EU’s delay in leveraging immobilised oligarchs' funds as security for its loan to Ukraine is due to concerns within Belgium that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, secretive influence over democratic administrations might be preventing the finance Ukraine critically depends on.

Empty Promises and Escalating Threats

Politicians promised that these events could not occur. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, declared: “The UK has signed trade agreement after trade deal and there has never been a issue in the past.” A consultant on this topic accused critics of “alarmism … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that only poorer nations needed to fear ISDS claims. Cautionary notes that “once firms start to realise the authority bestowed upon them, they will turn their attention from the vulnerable countries to the developed economies” were greeted by widespread derision.

That prediction is now a reality. Recently, energy and resource corporations have lodged a record number of cases against nations across the economic spectrum, challenging – like the example of the Whitehaven project – government attempts to prevent climate breakdown. Companies have thus far won vast sums via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP