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What is your understand our democratic process operates? It could be similar to this. The public votes for MPs. They debate and pass bills. When a majority is obtained, the bills become law. Statutes is upheld by the courts. Simple as that. Well, that’s how it used to work. No longer.

The Rise of Secret Courts

In the modern era, overseas companies, or the billionaires behind them, have the power to sue elected administrations for the policies they pass, at private courts staffed by business advocates. The cases take place behind closed doors. Unlike our courts, these panels grant no avenue for appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even businesses headquartered in this country. The door is open solely for businesses registered abroad.

If a tribunal finds that a law or policy might diminish the corporation’s expected profits, it can award financial penalties of vast sums, potentially billions.

This compensation are based not on real financial harm but compensation the arbitrators decide the company would perhaps have made. The administration might be compelled to drop the legislation. It is hesitant to enacting future policies of a similar nature, due to the risk of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Unprecedented levels of cases are being filed, as companies observe each other, and investment funds fund legal actions in return for a portion of the awards. The result? National sovereignty and democratic governance are now unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the choices taken by elected bodies is that this provision has been inserted – absent public approval, and frequently under an atmosphere of total confidentiality – within bilateral investment treaties.

A Specific Instance: The UK Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the high court. The judge ruled that proposals to excavate the first major 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 could have zero effect on our carbon budgets. The Labour government later cancelled the licence the Tories had approved. Today, this victory faces being overturned by an secret arbitration panel answering to only the companies filing the suit.

Last August, a firm whose ultimate owners are based in the offshore financial centre initiated proceedings versus the UK government. The previous week a tribunal in Washington DC was set up to consider the case.

This firm is litigating against the UK for the profits it could have earned if the mine had been permitted to commence operations. We have no idea how much this could amount to. What legal team is acting on its behalf in opposition to the British government? An elected representative, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The administration passes a law, the high court upholds it, then a overseas corporation disputes it through an secretive arbitration panel, and a sitting MP represents its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coal mine dispute was established, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case at present, but it appears probable that he may employ the tribunal to challenge the restrictions the UK imposed on him subsequent to the Russian aggression. He has already initiated proceedings against Luxembourg on these grounds, demanding $16bn: an amount representing half state's annual revenue. Part of the lawyers on his side? the wife of a former prime minister, spouse of the ex-UK leader.

International law scholars argue that the EU’s hesitation in using frozen Russian assets as security for its financial support package is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Growing Risks

Politicians promised that these events were not possible. In 2014, a government leader, championing the largest and riskiest of all such treaties, declared: “The UK has signed trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this issue described campaigners of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that only poorer nations needed to fear these lawsuits. Cautionary notes that “when companies begin to understand the authority bestowed upon them, they will redirect their efforts from the weak nations to the developed economies” were met with general mockery.

That warning has now materialised. In the current period, oil and gas and resource corporations have filed a unprecedented number of cases against nations across the economic spectrum, contesting – similar to the Cumbrian coalmine – state efforts to stop environmental catastrophe. Companies have to date won one hundred and fourteen billion dollars by using ISDS, of which energy giants have secured $84bn. That represents the combined GDP