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What is your perceive our democratic process functions? Perhaps along the lines of this. The public votes for MPs. They debate and pass bills. Should a majority is obtained, the bills are enacted as law. Statutes is maintained by the courts. End of story. Well, that was how it used to work. Those days are over.

The Rise of Secret Courts

In the modern era, international firms, or the billionaires that control them, have the power to sue nation states for the regulations they pass, at secret arbitration panels composed of business advocates. The cases are conducted away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or judicial review. The general public are unable to file a case to them, just as our government, or even businesses headquartered in this country. They are open exclusively to corporations based overseas.

When a secret court finds that a legislative action might diminish the corporation’s expected profits, it has the power to grant damages of hundreds of millions, potentially billions.

This compensation constitute not tangible damages but funds the arbitrators decide the company might otherwise have made. The administration might be compelled to abandon its policy. It will be deterred from passing future laws in that area, for fear of facing litigation.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being brought, as firms observe each other, and investment funds fund legal actions for a share of a cut of the settlements. The result? National sovereignty and democracy are turning into too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the choices made by parliaments is that this clause has been incorporated – absent public approval, and often in an atmosphere of extreme secrecy – within international trade agreements.

A Real-World Instance: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the high court. The justice determined that plans to excavate the first major coal mine in the UK for three decades, in northwest England, were illegally sanctioned by the previous government, which had accepted the questionable argument that the mine could have no impact on climate commitments. The incoming administration later cancelled the licence the former government had issued. Today, this success could be compromised by an offshore tribunal accountable to exclusively the entities bringing the case.

Last August, a corporate entity whose beneficial owners reside in the Cayman Islands lodged a claim versus the UK government. Recently a tribunal in Washington DC was established to hear it.

The company is seeking compensation from the UK for the revenue it might have made if the mine had been allowed to commence operations. We have little idea how much this could amount to. What legal team is serving as its counsel challenging the British government? A member of parliament, and ex-law officer in the Conservative government, that great patriot Geoffrey Cox. The state makes a decision, the domestic court upholds it, then a international entity challenges it through an unaccountable private court, and a elected official represents its behalf.

An Oligarch's Case

Concurrently that the panel on the mining lawsuit was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. We know little of the case to date, but it seems likely that he will utilise the arbitration process to challenge the penalties the UK levied against him subsequent to the Russian aggression. He has initiated proceedings against a small nation on these grounds, seeking sixteen billion dollars: equivalent to half of state's yearly budget. Among the legal team representing him there? a prominent lawyer, wife of the former British prime minister.

Legal experts argue that the EU’s delay in utilising seized Russian assets as collateral for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over democratic administrations may be obstructing the funds Ukraine urgently requires.

Empty Promises and Growing Risks

We were assured that such things wouldn’t happen. Previously, a government leader, promoting the largest and riskiest of all investment pacts, stated: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” An adviser on this issue accused activists of “exaggeration … the truth is, ISDS barely touches the UK much”. The overall message appeared to be that only poorer nations should be concerned by these lawsuits. Predictions that “as corporations begin to understand the influence bestowed upon them, they will redirect their efforts from the poorer states to the strong ones” were greeted by scepticism.

That warning is now a reality. In the current period, energy and mining firms have lodged a unprecedented number of suits against nations both wealthy and developing, contesting – similar to the Cumbrian coalmine – state efforts to stop environmental catastrophe. Firms have so far won $114bn via ISDS, of which energy giants have been awarded eighty-four billion dollars. That is equivalent to the combined GDP