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What is your perceive our democratic process works? Maybe similar to this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills pass into law. Legislation is upheld by the courts. Simple as that. Well, that used to be how it once functioned. Those days are over.

The Rise of Secret Courts

In the modern era, overseas companies, or the billionaires who own them, have the power to sue elected administrations for the laws they pass, at secret arbitration panels composed of commercial attorneys. Such disputes are conducted in secret. In contrast to domestic courts, these bodies grant no right of appeal or judicial review. You or I are unable to file a case to them, just as our government, or even companies headquartered in this country. They are open exclusively to corporations operating from foreign soil.

Should an arbitration panel rules that a government measure may compromise the corporation’s expected profits, it can award financial penalties of hundreds of millions of pounds, even billions.

This compensation represent not actual losses but compensation the panel members conclude the company might otherwise have made. The state could be forced to abandon its policy. It will be discouraged from enacting future policies of a similar nature, for fear of facing litigation.

A System Growing Exponentially

Historically high figures of cases are being filed, as corporations take cues from each other, and private equity bankroll lawsuits in exchange for a portion of the takings. The consequence? Sovereignty and popular rule are now prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it can override domestic law and the rulings enacted by legislatures is that this stipulation has been incorporated – absent public approval, and often in a climate of profound opacity – into international trade agreements.

A Specific Instance: The Cumbrian Coalmine

A year ago, activists won a great victory at the senior court. The judge found that plans to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine could have no impact on our carbon budgets. The incoming administration subsequently revoked the licence the Tories had approved. Now, this legal outcome is under threat by an secret arbitration panel answering to only the entities filing the suit.

In August, a firm whose beneficial owners are based in the offshore financial centre filed a lawsuit against the UK government. Recently a arbitration panel in Washington DC was convened to adjudicate on it.

The company is litigating against the UK for the profits it might have made if the mine had been allowed to proceed. We have no idea how much this might be. What legal team is representing it in opposition to the UK administration? A member of parliament, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The state makes a decision, the high court supports it, then a international entity disputes it through an unaccountable offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Lawsuit

On the same day that the panel on the coal mine dispute was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows little of the case at present, but it is highly possible that he may employ the arbitration process to contest the restrictions the UK imposed on him following the Russian aggression. He has already initiated proceedings against a small nation for this reason, demanding sixteen billion dollars: half that government’s yearly income. Among the legal team acting for him in that case? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s delay in utilising seized oligarchs' funds as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, unaccountable authority over democratic administrations may be obstructing the finance Ukraine critically depends on.

Misleading Claims and Escalating Costs

We were assured that these events were not possible. Years ago, a senior politician, championing the largest and riskiest of all investment pacts, stated: “The UK has signed trade deal upon trade deal and there has not been a problem in the past.” An expert on this topic labelled activists of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message seemed to be that solely developing countries had to worry about ISDS claims. Predictions that “once firms begin to understand the authority they now possess, they will shift their focus from the vulnerable countries to the developed economies” were met with widespread derision.

That prediction has come to pass. This year, energy and resource corporations have lodged a unprecedented number of cases against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – government attempts to stop global warming. Firms have so far won $114bn by using ISDS, of which energy giants have obtained $84bn. That represents the combined GDP