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What is your perceive our democratic process operates? Maybe similar to this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills become law. Legislation is upheld by the courts. Simple as that. However, that was how it used to work. Those days are over.

The Emergence of Secret Tribunals

Today, overseas companies, or the billionaires that control them, are able to litigate against elected administrations for the policies they pass, at private courts made up of business advocates. The cases are conducted in secret. Unlike our courts, these tribunals provide no opportunity to appeal or oversight by judges. You or I are barred from bringing a case to them, and neither can our government, including businesses based in this country. Access is granted solely for entities based overseas.

If a tribunal finds that a law or policy could harm the corporation’s expected profits, it may order damages of vast sums, potentially billions.

These awards constitute not tangible damages but compensation the arbitrators decide the company could potentially have made. The administration could be forced to rescind the measure. It becomes discouraged from enacting future policies in that area, due to the risk of incurring a lawsuit.

A System Running Rampant

Unprecedented levels of disputes are being initiated, as firms observe each other, and investment funds finance suits in return for a portion of the awards. The outcome? National sovereignty and democracy are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The reason it can supersede a country's own laws and the choices enacted by parliaments is that this provision has been inserted – absent public approval, and typically amid a climate of profound opacity – inside international trade agreements.

A Specific Instance: The UK Coal Mine

Last year, environmental campaigners won a great victory at the high court. The justice ruled that schemes to dig the first deep coalmine in the UK for three decades, in Cumbria, were illegally sanctioned by the previous government, which had agreed to the extraordinary assertion that the mine would have had zero effect on climate commitments. The new government later cancelled the permission the Tories had issued. Currently, this success is under threat by an offshore tribunal reporting to exclusively the companies bringing the case.

Last August, a corporate entity whose beneficial owners are based in the Cayman Islands lodged a claim challenging the UK government. Last week a arbitration panel in Washington DC was convened to hear it.

The claimant is litigating against the UK for the revenue it would have generated if the mine had received permission to commence operations. The public has no clear indication how much this sum represents. What legal team is serving as its counsel in opposition to the state? A member of parliament, and ex-law officer in the previous government, the self-proclaimed patriot Sir Geoffrey Cox. The government makes a decision, the high court upholds it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Case

On the same day that the tribunal on the coalmine case was appointed, information emerged from a government response 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 is highly possible that he will utilise the ISDS mechanism to fight the restrictions the UK imposed on him subsequent to the war in Ukraine. He has already started suing Luxembourg with similar intent, seeking a colossal sum: an amount representing half nation's yearly budget. Part of the counsel representing him there? a prominent lawyer, wife of the former British prime minister.

Legal experts contend that the EU’s delay in leveraging immobilised oligarchs' funds as security for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over democratic administrations could be blocking the funds Ukraine urgently requires.

Misleading Claims and Mounting Threats

We were assured that these events were not possible. In 2014, a former prime minister, championing the most significant and hazardous of all such treaties, declared: “We’ve signed trade agreement upon trade deal and there has not been a issue in the past.” A consultant on this issue described campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression seemed to be that only poorer nations should be concerned by these lawsuits. Warnings that “when companies begin to understand the power they now possess, they will turn their attention from the poorer states to the developed economies” were met with scepticism.

That warning has now materialised. In the current period, fossil fuel and extraction companies have filed a unprecedented number of cases against nations both wealthy and developing, contesting – similar to the Cumbrian coalmine – government attempts to stop climate breakdown. Firms have thus far won one hundred and fourteen billion dollars via ISDS, of which oil majors have secured eighty-four billion dollars. That represents the combined GDP