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Can you perceive our democratic process works? Perhaps something like this. We elect MPs. They vote on bills. Should a majority is achieved, the bills become law. Statutes is maintained by the courts. That's it. Yet, that’s how it once functioned. Not anymore.

The Advent of Secret Courts

Nowadays, international firms, or the wealthy individuals behind them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals staffed by corporate lawyers. Such disputes are conducted away from public scrutiny. Unlike our courts, these panels grant no avenue for appeal or legal review. The general public are barred from bringing a case to them, and neither can our government, including companies based in this country. They are open only to entities registered abroad.

Should an arbitration panel rules that a law or policy could harm the corporation’s expected profits, it can award financial penalties of hundreds of millions, even billions.

This compensation represent not actual losses but money the tribunal officials determine the company could potentially have made. The state might be compelled to drop the legislation. It will be deterred from introducing similar legislation along the same lines, worried about facing litigation.

A System Growing Exponentially

Unprecedented levels of disputes are being filed, as companies take cues from each other, and private equity bankroll lawsuits in exchange for a cut of the settlements. The result? Sovereignty and popular rule are becoming too costly.

The process is called “investor-state dispute settlement” (ISDS). The reason it can supersede a country's own laws and the choices made by elected bodies is that this clause has been inserted – absent public approval, and typically amid an atmosphere of profound opacity – into international trade agreements.

A Specific Example: The UK Coal Mine

A year ago, a conservation group won a great victory at the High Court. The judge determined that schemes to open the first new deep coal mine in the UK for a generation, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine would have had no impact on our carbon budgets. The Labour government later cancelled the permission the Tories had issued. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to exclusively the corporations filing the suit.

In August, a company whose beneficial owners are located in the Cayman Islands filed a lawsuit versus the UK government. The previous week a dispute settlement body in Washington DC was set up to consider the case.

The claimant is suing the UK for the money it could have earned if the mine had received permission to go ahead. Citizens have no clear indication how much this might be. Which individual is serving as its counsel against the British government? A sitting MP, and ex-law officer in the previous government, the noted patriot the MP. The state enacts a policy, the national judiciary upholds it, then a international entity challenges it through an unaccountable private court, and a sitting MP works for its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coal mine dispute was appointed, we learned from a parliamentary answer 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 appears probable that he will utilise the tribunal to challenge the penalties the UK levied against him after the war in Ukraine. He has already started suing Luxembourg on these grounds, claiming a colossal sum: half that state's yearly income. Part of the lawyers acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

Legal experts contend that the EU’s hesitation in leveraging immobilised oligarchs' funds as security for its aid for Ukraine arises from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a investment pact. This remarkable, secretive influence over elected governments might be preventing the money Ukraine desperately needs.

Misleading Claims and Mounting Costs

We were assured that such things were not possible. In 2014, a former prime minister, promoting the biggest and most dangerous of all investment pacts, stated: “The UK has signed trade deal after trade deal and there has not been a problem in the past.” An expert on this topic accused campaigners of “alarmism … the truth is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that only poorer nations had to worry about ISDS claims. Predictions that “as corporations start to realise the authority bestowed upon them, they will shift their focus from the weak nations to the wealthy nations” were met with general mockery.

That warning has now materialised. In the current period, energy and extraction companies have filed a unprecedented number of cases against nations both wealthy and developing, opposing – as in the case of the UK mine – government attempts to stop climate breakdown. Firms have thus far won one hundred and fourteen billion dollars via ISDS, of which oil majors have obtained the majority. That equates to the combined GDP