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What is your perceive our democratic process works? Maybe similar to this. Citizens choose MPs. They vote on bills. Should a majority is achieved, the bills pass into law. The law is upheld by the courts. That's it. Well, that’s how it used to work. Not anymore.

The Emergence of Secret Tribunals

Today, foreign corporations, along with the wealthy individuals that control them, can sue nation states for the laws they pass, at private courts staffed by commercial attorneys. Such disputes are conducted behind closed doors. Differing from national judiciaries, these panels allow no opportunity to appeal or legal review. You or I cannot take a case to them, and neither can our government, including enterprises operating from this country. Access is granted only to businesses based overseas.

Should an arbitration panel determines that a law or policy could harm the corporation’s anticipated profits, it can award financial penalties of vast sums, running into billions.

These awards constitute not real financial harm but compensation the tribunal officials decide the company would perhaps have made. The government could be forced to drop the legislation. It is discouraged from introducing similar legislation in that area, worried about being sued.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being brought, as companies observe each other, and hedge funds finance suits for a share of a share of the takings. The consequence? Democratic sovereignty and democracy are turning into too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The explanation it can supersede domestic law and the rulings taken by elected bodies is that this stipulation has been inserted – absent public approval, and often in a climate of profound opacity – within trade treaties.

A Concrete Instance: The UK Coalmine

Last year, activists achieved a major legal triumph at the high court. The presiding officer found that schemes to dig the first deep coalmine in the UK for 30 years, in northwest England, had been illegally sanctioned by the outgoing administration, which had endorsed the questionable argument that the mine would have no consequence on national carbon targets. The Labour government subsequently revoked the licence the Tories had granted. Today, this legal outcome is under threat by an secret arbitration panel answering to only the corporations bringing the case.

Last August, a firm whose beneficial owners are located in the Cayman Islands lodged a claim against the UK government. Last week a dispute settlement body in Washington DC was convened to adjudicate on it.

The claimant is suing the UK for the money it might have made if the mine had been allowed to go ahead. The public has no idea how much this might be. Who is acting on its behalf against the state? A member of parliament, and ex-law officer in the previous government, the noted patriot Geoffrey Cox. The state enacts a policy, the national judiciary supports it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

An Oligarch's Lawsuit

Simultaneously that the panel on the mining lawsuit was established, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know little of the case to date, but it is highly possible that he’ll use the arbitration process to contest the restrictions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against another European state for this reason, claiming a colossal sum: half that nation's yearly income. Part of the legal team representing him there? the wife of a former prime minister, wife of the former British prime minister.

Legal experts argue that the EU’s procrastination in leveraging immobilised oligarchs' funds as security for its loan to Ukraine is due to concerns within Belgium that it could be taken to court in the offshore corporate courts, under a investment pact. This extraordinary, secretive influence over sovereign states could be blocking the funds Ukraine critically depends on.

False Assurances and Growing Costs

The public was told that these events were not possible. Years ago, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, declared: “The UK has signed investment treaty after trade deal and there has not been a case in the past.” A consultant on this topic described campaigners of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that solely developing countries should be concerned by ISDS claims. Warnings that “when companies begin to understand the influence bestowed upon them, they will turn their attention from the weak nations to the wealthy nations” were greeted by general mockery.

That threat is now a reality. Recently, fossil fuel and resource corporations have lodged a unprecedented number of claims against nations across the economic spectrum, contesting – as in the case of the UK mine – official measures to prevent global warming. Companies have to date won vast sums through ISDS, of which oil majors have been awarded the majority. That represents the combined GDP