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What is your reckon our democratic process functions? Perhaps along the lines of this. We elect MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. The law is maintained by the courts. That's it. Well, that’s how it operated in the past. No longer.

The Emergence of Secret Tribunals

Today, foreign corporations, and the wealthy individuals who own them, are able to litigate against nation states for the policies they pass, at private courts made up of commercial attorneys. The cases are held behind closed doors. Differing from national judiciaries, these panels allow no right of appeal or legal review. The general public cannot take a case to them, just as our government, or even businesses based in this country. Access is granted only to corporations based overseas.

Should an arbitration panel determines that a legislative action might diminish the corporation’s anticipated profits, it may order damages of vast sums, potentially billions.

These sums constitute not actual losses but funds the arbitrators decide the company could potentially have made. The administration could be forced to abandon its policy. It will be deterred from introducing similar legislation of a similar nature, due to the risk of being sued.

A Mechanism Growing Exponentially

Record numbers of disputes are being initiated, as companies take cues from each other, and private equity fund legal actions in return for a cut of the settlements. The result? Sovereignty and popular rule are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede a country's own laws and the decisions taken by legislatures is that this clause has been inserted – without public consent, and often in an atmosphere of profound opacity – inside bilateral investment treaties.

A Real-World Instance: The Whitehaven Coalmine

Last year, activists won a great victory at the high court. The judge found that plans to excavate the first deep coalmine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the outgoing administration, which had endorsed the questionable argument that the mine could have no consequence on national carbon targets. The Labour government later cancelled the consent the Tories had issued. Now, this success is under threat by an offshore tribunal reporting to only the companies petitioning it.

During August, a firm whose final controllers are based in the tax haven initiated proceedings versus the UK government. Last week a arbitration panel in the US capital was set up to hear it.

The claimant is suing the UK for the money it could have earned if the mine had received permission to go ahead. The public has no idea how much this might be. What legal team is serving as its counsel challenging the British government? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Geoffrey Cox. The state passes a law, the high court validates it, then a foreign company challenges it through an undemocratic private court, and a sitting MP represents its behalf.

The Russian Lawsuit

Concurrently that the tribunal on the mining lawsuit was convened, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case to date, but it seems likely that he’ll use the ISDS mechanism to fight the restrictions the UK enacted against him subsequent to the war in Ukraine. He has started suing a small nation for this reason, demanding a colossal sum: half that state's yearly budget. Among the legal team on his side? Cherie Blair, spouse of the ex-UK leader.

International law scholars believe that the EU’s delay in using frozen oligarchs' funds as security for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, secretive influence over democratic administrations might be preventing the money Ukraine desperately needs.

False Assurances and Mounting Risks

The public was told that such things were not possible. Previously, a former prime minister, championing the largest and riskiest of all these agreements, stated: “The UK has signed trade agreement upon trade deal and there has not been a problem in the past.” An adviser on this matter accused activists of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that only poorer nations should be concerned by such legal actions. Predictions that “once firms grasp the influence bestowed upon them, they will redirect their efforts from the poorer states to the developed economies” were met with widespread derision.

That warning is now a reality. Recently, energy and extraction companies have initiated a unprecedented number of claims against nations both wealthy and developing, contesting – as in the case of the Whitehaven project – official measures to prevent climate breakdown. Companies have thus far won one hundred and fourteen billion dollars via ISDS, of which energy giants have secured $84bn. That represents the combined GDP