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Can you understand our democratic process works? Maybe along the lines of this. We elect MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. That's it. However, that’s how it used to work. No longer.

The Rise of Secret Courts

Nowadays, overseas companies, or the oligarchs that control them, can sue governments for the laws they pass, at private courts staffed by business advocates. The cases are held away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or oversight by judges. The general public cannot take a case to them, just as our government, or even businesses based in this country. They are open only to corporations based overseas.

If a tribunal rules that a law or policy might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions of pounds, running into billions.

These sums constitute not real financial harm but money the panel members decide the company could potentially have made. The government might be compelled to drop the legislation. It will be discouraged from passing future laws of a similar nature, due to the risk of incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of cases are being brought, as corporations learn from each other, and investment funds fund legal actions in exchange for a share of the takings. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to override a country's own laws and the rulings made by elected bodies is that this stipulation has been incorporated – without democratic mandate, and frequently under a climate of profound opacity – into trade treaties.

A Specific Instance: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners won a great victory at the high court. The justice found that plans to excavate the first major coal mine in the UK for three decades, in northwest England, were unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine could have no consequence on climate commitments. The Labour government subsequently revoked the licence the former government had granted. Today, this success faces being overturned by an secret arbitration panel reporting to no one but the corporations petitioning it.

During August, a corporate entity whose beneficial owners reside in the tax haven initiated proceedings against the UK government. The previous week a arbitration panel in Washington DC was established to consider the case.

The company is litigating against the UK for the revenue it would have generated if the mine had been allowed to proceed. The public has no idea how much this sum represents. Which individual is representing it in opposition to the state? An elected representative, and ex-law officer in the Conservative government, the noted patriot the MP. The administration enacts a policy, the domestic court upholds it, then a overseas corporation contests it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

The Russian Challenge

Concurrently that the court on the coal mine dispute was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. The public knows scarce of the case at present, but it appears probable that he may employ the arbitration process to challenge the sanctions the UK imposed on him after the invasion of Ukraine. He has already started suing Luxembourg with similar intent, demanding sixteen billion dollars: equivalent to half of government’s yearly income. Included in the legal team representing him there? a prominent lawyer, spouse of the ex-UK leader.

Legal experts contend that the EU’s delay in utilising seized state funds as collateral for its loan to Ukraine arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states could be blocking the funds Ukraine critically depends on.

Empty Promises and Mounting Threats

The public was told that such things wouldn’t happen. Previously, a government leader, championing the largest and riskiest of all these agreements, told us: “We’ve signed trade agreement upon trade deal and we have never seen a issue in the past.” A consultant on this matter accused campaigners of “alarmism … the truth is, ISDS barely touches the UK much”. The general impression appeared to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “as corporations begin to understand the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” were met with scepticism.

That prediction is now a reality. Recently, energy and extraction companies have lodged a record number of suits against nations rich and poor, contesting – like the example of the Cumbrian coalmine – official measures to stop environmental catastrophe. Companies have to date won vast sums by using ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP