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What is your understand our democratic process works? Perhaps similar to this. We elect MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Legislation are enforced by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Advent of Secret Courts

Nowadays, foreign corporations, along with the billionaires that control them, are able to litigate against governments for the regulations they pass, at secret arbitration panels composed of corporate lawyers. These proceedings are held away from public scrutiny. Differing from national judiciaries, these panels provide no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, nor can our government, including enterprises based in this country. The door is open solely for corporations registered abroad.

If a tribunal finds that a law or policy might diminish the corporation’s projected profits, it has the power to grant compensation of vast sums, running into billions.

This compensation constitute not tangible damages but funds the panel members decide the company would perhaps have made. The state may have to rescind the measure. It will be hesitant to passing future laws of a similar nature, worried about incurring a lawsuit.

A System Growing Exponentially

Record numbers of cases are being brought, as firms observe each other, and investment funds bankroll lawsuits in return for a share of the takings. The outcome? Democratic sovereignty and democratic governance are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to override a country's own laws and the decisions made by parliaments is that this provision has been written – absent public approval, and frequently under a climate of extreme secrecy – within international trade agreements.

A Concrete Example: The UK Coal Mine

A year ago, activists won a great victory at the senior court. The justice found that plans to excavate the first deep coalmine in the UK for a generation, in Cumbria, were wrongly permitted by the outgoing administration, which had accepted the extraordinary assertion that the mine would have zero effect on national carbon targets. The incoming administration subsequently revoked the consent the Tories had issued. Currently, this legal outcome is under threat by an secret arbitration panel accountable to only the companies filing the suit.

During August, a firm whose ultimate owners are located in the offshore financial centre filed a lawsuit versus the UK government. Recently a dispute settlement body in Washington DC was established to consider the case.

This firm is seeking compensation from the UK for the profits it might have made if the mine had received permission to commence operations. Citizens have no idea how much this could amount to. What legal team is serving as its counsel challenging the UK administration? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The state makes a decision, the domestic court validates it, then a overseas corporation disputes it through an secretive arbitration panel, and a elected official acts on its behalf.

The Russian Lawsuit

On the same day that the panel on the mining lawsuit was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case at present, but it seems likely that he will utilise the arbitration process to contest the sanctions the UK imposed on him following the Russian aggression. He has previously initiated proceedings against another European state for this reason, demanding a colossal sum: half that state's annual revenue. Included in the legal team acting for him in that case? a prominent lawyer, spouse of the former British prime minister.

Legal experts contend that the EU’s procrastination in leveraging immobilised Russian assets as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over democratic administrations could be blocking the finance Ukraine critically depends on.

Empty Promises and Growing Threats

Politicians promised that these scenarios were not possible. In 2014, a government leader, championing the most significant and hazardous of all these agreements, stated: “The UK has signed trade deal after trade deal and we have never seen a problem in the past.” An expert on this issue described campaigners of “exaggeration … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations needed to fear such legal actions. Warnings that “as corporations begin to understand the authority they now possess, they will shift their focus from the weak nations to the developed economies” were met with general mockery.

That threat has come to pass. Recently, fossil fuel and resource corporations have filed a unprecedented number of cases against nations rich and poor, contesting – similar to the UK mine – official measures to stop global warming. Corporations have thus far won vast sums through ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP