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Can you perceive our democratic process works? It could be something like this. The public votes for MPs. They debate and pass bills. Should a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. End of story. Yet, that’s how it used to work. Those days are over.

The Rise of Shadow Tribunals

Today, international firms, or the wealthy individuals that control them, have the power to sue nation states for the policies they pass, at private courts composed of commercial attorneys. These proceedings are conducted in secret. Unlike our courts, these tribunals provide no opportunity to appeal or judicial review. The general public cannot take a case to them, nor can our government, or even businesses operating from this country. The door is open only to businesses registered abroad.

When a secret court rules that a government measure could harm the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, running into billions.

These awards represent not tangible damages but money the tribunal officials conclude the company might otherwise have made. The administration might be compelled to abandon its policy. It will be hesitant to enacting future policies in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Unprecedented levels of disputes are being filed, as corporations take cues from each other, and investment funds fund legal actions in exchange for a share of the settlements. The consequence? Democratic sovereignty and democratic governance are turning into unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede domestic law and the rulings made by elected bodies is that this provision has been written – absent public approval, and typically amid a climate of profound opacity – inside bilateral investment treaties.

A Specific Case: The Whitehaven Coalmine

Last year, activists achieved a major legal triumph at the High Court. The judge ruled that proposals to open the first deep coalmine in the UK for a generation, in northwest England, were unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine could have zero effect on national carbon targets. The incoming administration subsequently revoked the permission the Tories had granted. Now, this success could be compromised by an secret arbitration panel answering to only the companies bringing the case.

During August, a company whose ultimate owners are located in the offshore financial centre filed a lawsuit against the UK government. Last week a tribunal in Washington DC was convened to consider the case.

The claimant is seeking compensation from the UK for the money it might have made if the mine had received permission to proceed. Citizens have little idea how much this could amount to. What legal team is representing it in opposition to the state? A sitting MP, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The state passes a law, the national judiciary upholds it, then a overseas corporation contests it through an undemocratic arbitration panel, and a elected official works for its behalf.

A Sanctions Case

Concurrently that the tribunal on the mining lawsuit was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. We know scarce of the case to date, but it is highly possible that he’ll use the arbitration process to contest the restrictions the UK enacted against him following the Russian aggression. He has already filed a claim against a small nation with similar intent, claiming sixteen billion dollars: an amount representing half government’s annual revenue. Among the counsel representing him there? the wife of a former prime minister, married to the previous PM.

Trade specialists contend that the EU’s hesitation in utilising seized state funds as collateral for its loan to Ukraine stems from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, secretive influence over elected governments could be blocking the money Ukraine critically depends on.

Empty Promises and Growing Threats

We were assured that such things could not occur. In 2014, a senior politician, promoting the biggest and most dangerous of all such treaties, told us: “Britain has agreed to trade deal upon trade deal and there has never been a problem in the past.” An expert on this issue described critics of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that only poorer nations needed to fear such legal actions. Warnings that “once firms begin to understand the power they’ve been granted, they will turn their attention from the poorer states to the wealthy nations” were greeted by general mockery.

That threat is now a reality. Recently, oil and gas and mining firms have initiated a record number of suits against nations across the economic spectrum, challenging – like the example of the Whitehaven project – official measures to halt environmental catastrophe. Companies have so far won $114bn through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That equates to the combined GDP