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Can you understand our democratic process functions? Maybe similar to this. The public votes for MPs. They legislate on bills. If a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. That's it. Well, that’s how it once functioned. Those days are over.

The Emergence of Secret Courts

Today, international firms, along with the wealthy individuals behind them, have the power to sue governments for the regulations they pass, at private courts composed of corporate lawyers. Such disputes are held away from public scrutiny. Unlike our courts, these tribunals provide no avenue for appeal or legal review. You or I cannot take a case to them, just as our government, including businesses operating from this country. Access is granted solely for businesses registered abroad.

If a tribunal finds that a government measure might diminish the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, running into billions.

These awards represent not real financial harm but funds the tribunal officials conclude the company would perhaps have made. The administration might be compelled to rescind the measure. It is hesitant to enacting future policies along the same lines, worried about facing litigation.

A System Growing Exponentially

Historically high figures of legal actions are being initiated, as companies take cues from each other, and private equity fund legal actions in exchange for a portion of the settlements. The consequence? Democratic sovereignty and democracy are turning into prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the rulings made by parliaments is that this stipulation has been incorporated – without democratic mandate, and typically amid conditions of profound opacity – into bilateral investment treaties.

A Concrete Instance: The Cumbrian Coal Mine

Last year, activists achieved a major legal triumph at the High Court. The presiding officer determined that plans to open the first major coal mine in the UK for a generation, in northwest England, had been illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine would have had no consequence on our carbon budgets. The incoming administration later cancelled the permission the former government had approved. Now, this success could be compromised by an offshore tribunal accountable to exclusively the corporations filing the suit.

In August, a firm whose beneficial owners are located in the tax haven initiated proceedings versus the UK government. Last week a arbitration panel in the United States was convened to consider the case.

The claimant is litigating against the UK for the profits it could have earned if the mine had been allowed to go ahead. The public has little idea how much this sum represents. What legal team is representing it in opposition to the state? An elected representative, and ex-law officer in the previous government, the noted patriot Geoffrey Cox. The government passes a law, the national judiciary upholds it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a sitting MP works for its behalf.

The Russian Lawsuit

Concurrently that the panel on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case at present, but it is highly possible that he’ll use the arbitration process to contest the sanctions the UK imposed on him after the Russian aggression. He has already filed a claim against a small nation for this reason, seeking sixteen billion dollars: equivalent to half of nation's yearly budget. Among the counsel acting for him in that case? a prominent lawyer, married to the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its financial support package stems from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This remarkable, secretive influence over elected governments might be preventing the money Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that these events could not occur. Previously, a government leader, advocating for the biggest and most dangerous of all these agreements, told us: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” An expert on this issue described critics of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by these lawsuits. Cautionary notes that “once firms grasp the influence they now possess, they will redirect their efforts from the weak nations to the wealthy nations” were greeted by general mockery.

That prediction has now materialised. Recently, oil and gas and mining firms have initiated a record number of claims against nations rich and poor, challenging – like the example of the Whitehaven project – government attempts to prevent environmental catastrophe. Firms have thus far won one hundred and fourteen billion dollars through ISDS, of which oil majors have secured $84bn. That equates to the combined GDP