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Can you perceive our democratic process functions? Maybe something like this. We elect MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Statutes is maintained by the courts. Simple as that. Yet, that’s how it operated in the past. No longer.

The Advent of Secret Courts

In the modern era, foreign corporations, or the billionaires who own them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals composed of corporate lawyers. The cases are held away from public scrutiny. In contrast to domestic courts, these tribunals grant no right of appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, or even businesses operating from this country. The door is open only to corporations operating from foreign soil.

Should an arbitration panel determines that a government measure might diminish the corporation’s projected profits, it may order damages of vast sums, potentially billions.

These awards are based not on actual losses but funds the tribunal officials determine the company might otherwise have made. The government could be forced to drop the legislation. It will be hesitant to enacting future policies in that area, for fear of being sued.

A System Running Rampant

Unprecedented levels of cases are being brought, as corporations learn from each other, and hedge funds finance suits for a share of a cut of the takings. The outcome? Sovereignty and democratic governance are becoming prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump domestic law and the rulings taken by legislatures is that this provision has been inserted – absent public approval, and typically amid conditions of total confidentiality – into international trade agreements.

A Specific Example: The Whitehaven Coalmine

Twelve months ago, a conservation group secured a significant win at the High Court. The judge determined that plans to open the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had accepted the questionable argument that the mine would have had no impact on climate commitments. The incoming administration then withdrew the licence the Tories had granted. Currently, this success could be compromised by an foreign court accountable to only the corporations petitioning it.

In August, a firm whose beneficial owners are based in the offshore financial centre filed a lawsuit versus the UK government. Last week a arbitration panel in the US capital was convened to adjudicate on it.

The company is seeking compensation from the UK for the profits it would have generated if the mine had been permitted to commence operations. The public has no clear indication how much this might be. Which individual is serving as its counsel challenging the UK administration? An elected representative, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The administration makes a decision, the high court upholds it, then a international entity contests it through an undemocratic private court, and a sitting MP acts on its behalf.

A Sanctions Case

On the same day that the court on the mining lawsuit was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. The public knows little of the case to date, but it is highly possible that he may employ the tribunal to challenge the sanctions the UK levied against him after the invasion of Ukraine. He has already filed a claim against another European state with similar intent, seeking a colossal sum: half that nation's yearly income. Included in the legal team on his side? the wife of a former prime minister, married to the previous PM.

Legal experts believe that the EU’s delay in utilising seized oligarchs' funds as guarantee for its financial support package stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This extraordinary, undemocratic power over democratic administrations could be blocking the money Ukraine desperately needs.

Misleading Claims and Growing Costs

The public was told that these events were not possible. Previously, a senior politician, championing the biggest and most dangerous of all investment pacts, declared: “Britain has agreed to trade agreement after trade deal and there has never been a problem in the past.” An adviser on this issue described critics of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries had to worry about these lawsuits. Cautionary notes that “once firms start to realise the influence they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were met with general mockery.

That prediction is now a reality. Recently, fossil fuel and mining firms have initiated a historic level of claims against nations across the economic spectrum, opposing – as in the case of the Whitehaven project – state efforts to prevent environmental catastrophe. Firms have thus far won vast sums by using ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP