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What is your perceive our democratic process works? Maybe something like this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills pass into law. Legislation is upheld by the courts. That's it. Yet, that’s how it operated in the past. Those days are over.

The Emergence of Secret Tribunals

Nowadays, international firms, and the billionaires who own them, are able to litigate against governments for the laws they pass, at offshore tribunals composed of commercial attorneys. The cases are conducted in secret. Unlike our courts, these tribunals allow no avenue for appeal or legal review. You or I cannot take a case to them, nor can our government, or even enterprises operating from this country. They are open solely for entities registered abroad.

If a tribunal finds that a government measure may compromise the corporation’s anticipated profits, it can award compensation of hundreds of millions, potentially billions.

These awards represent not actual losses but money the panel members determine the company could potentially have made. The administration might be compelled to drop the legislation. It is deterred from enacting future policies of a similar nature, due to the risk of incurring a lawsuit.

A Process Running Rampant

Record numbers of cases are being brought, as corporations observe each other, and investment funds bankroll lawsuits in return for a portion of the settlements. The consequence? National sovereignty and democracy are now unaffordable.

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

A Concrete Instance: The Cumbrian Coal Mine

A year ago, a conservation group secured a significant win at the senior court. The presiding officer determined that plans to excavate the first new deep coal mine in the UK for 30 years, in Cumbria, were found to be wrongly permitted by the outgoing administration, which had endorsed the questionable argument that the mine would have no consequence on our carbon budgets. The incoming administration later cancelled the licence the former government had granted. Today, this legal outcome could be compromised by an secret arbitration panel accountable to only the corporations filing the suit.

During August, a company whose final controllers are located in the tax haven filed a lawsuit challenging the UK government. The previous week a dispute settlement body in Washington DC was established to hear it.

This firm is seeking compensation from the UK for the revenue it could have earned if the mine had been allowed to proceed. Citizens have no idea how much this could amount to. Who is representing it challenging the British government? A sitting MP, and ex-law officer in the outgoing administration, that great patriot Sir Geoffrey Cox. The administration passes a law, the high court validates it, then a overseas corporation disputes it through an undemocratic private court, and a member of our parliament acts on its behalf.

A Sanctions Case

On the same day that the tribunal on the mining lawsuit was convened, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows scarce of the case at present, but it is highly possible that he’ll use the tribunal to contest the penalties the UK levied against him after the invasion of Ukraine. He has previously initiated proceedings against Luxembourg with similar intent, claiming $16bn: equivalent to half of nation's annual revenue. Included in the legal team acting for him in that case? Cherie Blair, spouse of the former British prime minister.

Trade specialists contend that the EU’s delay in using frozen state funds as security for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, secretive influence over democratic administrations might be preventing the finance Ukraine urgently requires.

False Assurances and Growing Costs

We were assured that such things wouldn’t happen. In 2014, a former prime minister, promoting the most significant and hazardous of all these agreements, told us: “We’ve signed trade deal after trade deal and we have never seen a case in the past.” A consultant on this issue described activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that exclusively weaker states should be concerned by ISDS claims. Warnings that “when companies grasp the influence bestowed upon them, they will redirect their efforts from the weak nations to the developed economies” were greeted by widespread derision.

That prediction is now a reality. Recently, oil and gas and extraction companies have initiated a unprecedented number of suits against nations both wealthy and developing, contesting – as in the case of the UK mine – official measures to stop global warming. Corporations have to date won $114bn by using ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP