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What is your perceive our democratic process works? Perhaps similar to this. We elect MPs. They legislate on bills. If a majority is achieved, the bills are enacted as law. Legislation is upheld by the courts. That's it. However, that was how it once functioned. Not anymore.

The Emergence of Secret Tribunals

In the modern era, overseas companies, and the oligarchs who own them, can sue governments for the laws they pass, at private courts made up of corporate lawyers. Such disputes are conducted away from public scrutiny. Differing from national judiciaries, these bodies grant no right of appeal or legal review. You or I are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. They are open only to corporations operating from foreign soil.

When a secret court rules that a law or policy might diminish the corporation’s projected profits, it may order compensation of vast sums, even billions.

This compensation constitute not actual losses but money the panel members decide the company could potentially have made. The government might be compelled to abandon its policy. It will be deterred from passing future laws along the same lines, due to the risk of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being initiated, as companies learn from each other, and investment funds fund legal actions in exchange for a share of the awards. The outcome? Democratic sovereignty and democracy are becoming prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede national legislation and the decisions enacted by elected bodies is that this clause has been incorporated – without public consent, and often in an atmosphere of profound opacity – within trade treaties.

A Concrete Example: The Cumbrian Coal Mine

Twelve months ago, activists secured a significant win at the high court. The judge determined that proposals to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had agreed to the questionable argument that the mine would have zero effect on our carbon budgets. The Labour government then withdrew the licence the former government had granted. Today, this legal outcome faces being overturned by an foreign court accountable to only the entities filing the suit.

During August, a corporate entity whose final controllers are based in the tax haven filed a lawsuit challenging the UK government. Last week a tribunal in Washington DC was established to consider the case.

This firm is litigating against the UK for the profits it might have made if the mine had received permission to go ahead. The public has no clear indication how much this could amount to. What legal team is serving as its counsel challenging the UK administration? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The government passes a law, the domestic court upholds it, then a international entity contests it through an undemocratic arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Lawsuit

On the same day that the court on the coal mine dispute was established, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. The public knows little of the case to date, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK enacted against him following the war in Ukraine. He has filed a claim against another European state for this reason, seeking a colossal sum: equivalent to half of state's yearly budget. Among the counsel on his side? the wife of a former prime minister, spouse of the former British prime minister.

Legal experts believe that the EU’s procrastination in using frozen Russian assets as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states may be obstructing the money Ukraine critically depends on.

Empty Promises and Mounting Threats

Politicians promised that such things could not occur. Previously, a government leader, advocating for the most significant and hazardous of all these agreements, told us: “Britain has agreed to trade agreement upon trade deal and we have never seen a case in the past.” A consultant on this matter labelled activists of “alarmism … in reality, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states should be concerned by these lawsuits. Warnings that “once firms start to realise the power they’ve been granted, they will turn their attention from the poorer states to the developed economies” were met with widespread derision.

That prediction is now a reality. This year, fossil fuel and resource corporations have initiated a unprecedented number of suits against nations both wealthy and developing, contesting – similar to the UK mine – official measures to halt environmental catastrophe. Firms have so far won vast sums through ISDS, of which fossil fuel companies have obtained $84bn. That is equivalent to the combined GDP