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How do you reckon our democratic process works? It could be along the lines of this. The public votes for MPs. They legislate on bills. When a majority is obtained, the bills pass into law. Statutes is maintained by the courts. That's it. Well, that was how it operated in the past. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, along with the wealthy individuals who own them, are able to litigate against governments for the regulations they pass, at private courts composed of commercial attorneys. These proceedings are conducted behind closed doors. Differing from national judiciaries, these bodies grant no right of appeal or legal review. You or I are unable to file a case to them, just as our government, or even companies headquartered in this country. They are open solely for corporations operating from foreign soil.

When a secret court determines that a law or policy could harm the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions of pounds, potentially billions.

This compensation constitute not tangible damages but compensation the arbitrators conclude the company might otherwise have made. The government might be compelled to abandon its policy. It will be discouraged from enacting future policies in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of cases are being brought, as corporations take cues from each other, and hedge funds bankroll lawsuits in exchange for a share of the settlements. The result? Sovereignty and democracy are becoming unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override national legislation and the choices enacted by parliaments is that this clause has been inserted – absent public approval, and frequently under a climate of profound opacity – within international trade agreements.

A Real-World Example: The Cumbrian Coalmine

Last year, environmental campaigners secured a significant win at the high court. The presiding officer ruled that schemes to excavate the first new deep coal mine in the UK for three decades, in Cumbria, had been unlawfully approved by the Conservative government, which had endorsed the extraordinary assertion that the mine would have zero effect on national carbon targets. The Labour government subsequently revoked the licence the previous administration had approved. Currently, this victory could be compromised by an secret arbitration panel answering to no one but the corporations bringing the case.

Last August, a firm whose final controllers are based in the tax haven initiated proceedings versus the UK government. The previous week a tribunal in the US capital was set up to adjudicate on it.

This firm is suing the UK for the profits it could have earned if the mine had received permission to go ahead. The public has no clear indication how much this could amount to. What legal team is acting on its behalf in opposition to the British government? A sitting MP, and previous senior legal advisor in the previous government, that great patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a foreign company challenges it through an undemocratic arbitration panel, and a sitting MP represents its behalf.

The Russian Lawsuit

On the same day that the panel on the coalmine case was appointed, it was revealed from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case at present, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK enacted against him following the Russian aggression. He has already filed a claim against Luxembourg with similar intent, claiming a colossal sum: an amount representing half government’s annual revenue. Included in the counsel on his side? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s procrastination in utilising seized state funds as collateral for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Growing Costs

The public was told that such things could not occur. Years ago, a senior politician, advocating for the most significant and hazardous of all investment pacts, stated: “Britain has agreed to trade deal after trade deal and there has never been a problem in the past.” A consultant on this matter described critics of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression appeared to be that exclusively weaker states should be concerned by ISDS claims. Predictions that “as corporations begin to understand the power they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” were met with scepticism.

That warning is now a reality. In the current period, oil and gas and extraction companies have lodged a historic level of claims against nations across the economic spectrum, opposing – like the example of the UK mine – state efforts to halt climate breakdown. Corporations have so far won $114bn through ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP