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What is your reckon our democratic process operates? Perhaps similar to this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. Statutes are enforced by the courts. Simple as that. Well, that used to be how it operated in the past. No longer.

The Emergence of Secret Tribunals

Today, international firms, or the oligarchs that control them, can sue governments for the laws they pass, at private courts composed of commercial attorneys. Such disputes take place in secret. Differing from national judiciaries, these bodies grant no avenue for appeal or oversight by judges. You or I cannot take a case to them, just as our government, or even enterprises operating from this country. The door is open exclusively to entities based overseas.

If a tribunal determines 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 are based not on real financial harm but money the panel members determine the company could potentially have made. The government could be forced to drop the legislation. It is discouraged from introducing similar legislation in that area, worried about incurring a lawsuit.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being initiated, as corporations take cues from each other, and investment funds bankroll lawsuits in return for a cut of the awards. The consequence? Sovereignty and democracy are becoming prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the choices enacted by parliaments is that this clause has been incorporated – without public consent, and frequently under an atmosphere of profound opacity – within bilateral investment treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, a conservation group secured a significant win at the High Court. The justice ruled that plans to excavate the first deep coalmine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine would have no impact on national carbon targets. The new government then withdrew the licence the previous administration had issued. Today, this victory could be compromised by an secret arbitration panel accountable to only the corporations bringing the case.

Last August, a corporate entity whose final controllers are based in the Cayman Islands lodged a claim against the UK government. Recently a dispute settlement body in the US capital was convened to adjudicate on it.

This firm is litigating against the UK for the profits it might have made if the mine had been permitted to go ahead. The public has little idea how much this sum represents. What legal team is representing it against the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, that great patriot Sir Geoffrey Cox. The state passes a law, the national judiciary supports it, then a overseas corporation challenges it through an undemocratic private court, and a sitting MP works for its behalf.

An Oligarch's Lawsuit

Simultaneously that the tribunal on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case to date, but it is highly possible that he will utilise the ISDS mechanism to challenge the penalties the UK imposed on him after the Russian aggression. He has previously initiated proceedings against Luxembourg with similar intent, claiming sixteen billion dollars: half that nation's annual revenue. Included in the legal team on his side? the wife of a former prime minister, spouse of the former British prime minister.

Trade specialists contend that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its aid for Ukraine stems from Belgium’s fear that it could be sued in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over democratic administrations might be preventing the finance Ukraine desperately needs.

Misleading Claims and Growing Threats

Politicians promised that these scenarios wouldn’t happen. Years ago, a senior politician, championing the largest and riskiest of all investment pacts, declared: “We’ve signed trade deal after trade deal and we have never seen a case in the past.” An expert on this matter accused critics of “alarmism … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries had to worry about such legal actions. Warnings that “once firms start to realise the authority they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were met with widespread derision.

That warning has now materialised. This year, fossil fuel and resource corporations have lodged a record number of suits against nations rich and poor, challenging – similar to the Cumbrian coalmine – official measures to halt environmental catastrophe. Corporations have thus far won vast sums via ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP