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What is your reckon our democratic process functions? Perhaps similar to this. We elect MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. Well, that used to be how it once functioned. Not anymore.

The Rise of Secret Tribunals

In the modern era, foreign corporations, along with the oligarchs who own them, have the power to sue nation states for the policies they pass, at secret arbitration panels made up of business advocates. These proceedings take place away from public scrutiny. In contrast to domestic courts, these bodies provide no avenue for appeal or judicial review. The general public cannot take a case to them, and neither can our government, or even businesses based in this country. The door is open solely for entities based overseas.

Should an arbitration panel rules that a legislative action might diminish the corporation’s projected profits, it may order financial penalties of vast sums, running into billions.

These sums are based not on real financial harm but compensation the tribunal officials determine the company would perhaps have made. The government could be forced to drop the legislation. It becomes discouraged from passing future laws in that area, worried about facing litigation.

A System Spiralling Out of Control

Historically high figures of cases are being brought, as corporations learn from each other, and hedge funds bankroll lawsuits for a share of a portion of the takings. The result? National sovereignty and democratic governance are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the decisions enacted by legislatures is that this provision has been written – without public consent, and frequently under a climate of profound opacity – within international trade agreements.

A Real-World Instance: The Whitehaven Coal Mine

Last year, activists achieved a major legal triumph at the High Court. The justice found that proposals to dig the first new deep coal mine in the UK for 30 years, in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the extraordinary assertion that the mine would have had zero effect on climate commitments. The Labour government later cancelled the permission the Tories had issued. Currently, this victory could be compromised by an secret arbitration panel accountable to only the corporations petitioning it.

In August, a corporate entity whose final controllers reside in the offshore financial centre filed a lawsuit versus the UK government. Last week a dispute settlement body in Washington DC was set up to adjudicate on it.

The company is litigating against the UK for the money it might have made if the mine had been permitted to proceed. We have no idea how much this could amount to. Who is serving as its counsel against the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The government makes a decision, the domestic court supports it, then a foreign company disputes it through an unaccountable private court, and a sitting MP acts on its behalf.

The Russian Challenge

Concurrently that the court on the coal mine dispute was established, we learned from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know little of the case at present, but it appears probable that he’ll use the ISDS mechanism to fight the restrictions the UK enacted against him subsequent to the war in Ukraine. He has already started suing another European state on these grounds, seeking $16bn: half that nation's yearly budget. Part of the counsel acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Trade specialists contend that the EU’s delay in utilising seized oligarchs' funds as collateral for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This unprecedented, secretive influence over democratic administrations might be preventing the funds Ukraine critically depends on.

False Assurances and Growing Risks

Politicians promised that these scenarios wouldn’t happen. In 2014, a government leader, promoting the biggest and most dangerous of all these agreements, stated: “The UK has signed investment treaty upon trade deal and there has not been a issue in the past.” A consultant on this issue accused campaigners of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations had to worry about these lawsuits. Warnings that “when companies grasp the influence they’ve been granted, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That threat has now materialised. In the current period, energy and resource corporations have initiated a unprecedented number of cases against nations both wealthy and developing, opposing – as in the case of the UK mine – state efforts to halt global warming. Companies have so far won $114bn through ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP