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What is your perceive our democratic process functions? It could be something like this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. Statutes is maintained by the courts. End of story. Well, that was how it used to work. No longer.

The Advent of Secret Tribunals

In the modern era, overseas companies, or the billionaires who own them, are able to litigate against nation states for the laws they pass, at secret arbitration panels staffed by corporate lawyers. Such disputes are held away from public scrutiny. Differing from national judiciaries, these tribunals allow no right of appeal or judicial review. The general public are unable to file a case to them, just as our government, or even companies operating from this country. The door is open exclusively to businesses operating from foreign soil.

Should an arbitration panel rules that a government measure might diminish the corporation’s anticipated profits, it can award damages of vast sums, potentially billions.

These awards constitute not tangible damages but compensation the tribunal officials determine the company could potentially have made. The state may have to rescind the measure. It is hesitant to enacting future policies along the same lines, due to the risk of being sued.

A System Spiralling Out of Control

Record numbers of legal actions are being initiated, as firms observe each other, and investment funds finance suits in exchange for a portion of the settlements. The result? National sovereignty and democracy are becoming unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The explanation it can trump domestic law and the choices taken by elected bodies is that this stipulation has been inserted – absent public approval, and often in conditions of extreme secrecy – into bilateral investment treaties.

A Specific Instance: The UK Coal Mine

Last year, activists won a great victory at the high court. The presiding officer determined that plans to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the questionable argument that the mine would have had no impact on national carbon targets. The new government subsequently revoked the consent the previous administration had approved. Today, this success faces being overturned by an foreign court answering to only the corporations petitioning it.

During August, a corporate entity whose ultimate owners are based in the offshore financial centre filed a lawsuit challenging the UK government. Recently a arbitration panel in the United States was convened to consider the case.

The claimant is suing the UK for the revenue it might have made if the mine had received permission to go ahead. The public has little idea how much this could amount to. Who is serving as its counsel challenging the state? An elected representative, and previous senior legal advisor in the previous government, that great patriot the MP. The state makes a decision, the national judiciary supports it, then a foreign company contests it through an undemocratic arbitration panel, and a member of our parliament acts on its behalf.

The Russian Challenge

Simultaneously that the court on the coalmine case was convened, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. Details are little of the case at present, but it seems likely that he’ll use the tribunal to fight the penalties the UK levied against him after the Russian aggression. He has started suing Luxembourg on these grounds, seeking a colossal sum: equivalent to half of nation's yearly budget. Included in the counsel representing him there? a prominent lawyer, married to the previous PM.

Legal experts contend that the EU’s delay in utilising seized oligarchs' funds as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a investment pact. This extraordinary, unaccountable authority over democratic administrations could be blocking the finance Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that these scenarios could not occur. Previously, a senior politician, promoting the most significant and hazardous of all investment pacts, declared: “We’ve signed investment treaty upon trade deal and we have never seen a case in the past.” A consultant on this topic described critics of “scaremongering … the fact is, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries should be concerned by these lawsuits. Predictions that “as corporations begin to understand the power they’ve been granted, they will redirect their efforts from the poorer states to the strong ones” were dismissed with scepticism.

That warning is now a reality. This year, energy and mining firms have lodged a historic level of cases against nations rich and poor, contesting – similar to the UK mine – government attempts to stop global warming. Companies have to date won vast sums via ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP