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How do you reckon our democratic process operates? It could be something like this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills pass into law. The law is maintained by the courts. End of story. Yet, that’s how it used to work. Not anymore.

The Rise of Secret Tribunals

Nowadays, foreign corporations, and the billionaires that control them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals staffed by commercial attorneys. These proceedings are conducted in secret. Unlike our courts, these panels provide no avenue for appeal or oversight by judges. You or I are unable to file a case to them, and neither can our government, including companies headquartered in this country. They are open solely for businesses operating from foreign soil.

When a secret court rules that a government measure could harm the corporation’s projected profits, it can award financial penalties of hundreds of millions, even billions.

These sums constitute not tangible damages but money the arbitrators conclude the company would perhaps have made. The government could be forced to rescind the measure. It will be discouraged from passing future laws of a similar nature, worried about being sued.

A Process Running Rampant

Unprecedented levels of cases are being filed, as companies observe each other, and investment funds fund legal actions for a share of a cut of the settlements. The outcome? Sovereignty and democratic governance are turning into prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can trump national legislation and the choices taken by parliaments is that this stipulation has been inserted – without public consent, and often in a climate of total confidentiality – within international trade agreements.

A Specific Example: The UK Coalmine

A year ago, activists won a great victory at the high court. The justice found that proposals to open the first major coal mine in the UK for a generation, in northwest England, had been illegally sanctioned by the outgoing administration, which had agreed to the extraordinary assertion that the mine could have no impact on national carbon targets. The new government subsequently revoked the permission the previous administration had granted. Now, this victory is under threat by an foreign court answering to exclusively the corporations filing the suit.

Last August, a corporate entity whose beneficial owners are located in the Cayman Islands filed a lawsuit versus the UK government. Last week a arbitration panel in the United States was established to adjudicate on it.

The company is suing the UK for the revenue it would have generated if the mine had been permitted to commence operations. Citizens have no clear indication how much this sum represents. Who is acting on its behalf against the UK administration? A sitting MP, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The state enacts a policy, the high court validates it, then a international entity disputes it through an secretive private court, and a elected official works for its behalf.

An Oligarch's Case

Simultaneously that the tribunal on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know little of the case so far, but it is highly possible that he will utilise the arbitration process to contest the penalties the UK enacted against him following the war in Ukraine. He has previously started suing a small nation for this reason, demanding a colossal sum: an amount representing half government’s annual revenue. Part of the lawyers on his side? the wife of a former prime minister, wife of the former British prime minister.

Legal experts believe that the EU’s procrastination in using frozen 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 trade agreement. This extraordinary, undemocratic power over democratic administrations could be blocking the money Ukraine critically depends on.

False Assurances and Growing Threats

The public was told that these events were not possible. Years ago, a former prime minister, promoting the biggest and most dangerous of all these agreements, stated: “The UK has signed trade deal upon trade deal and there has not been a issue in the past.” An adviser on this topic labelled activists of “scaremongering … the fact is, ISDS barely touches the UK much”. The overall message seemed to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “when companies grasp the influence bestowed upon them, they will turn their attention from the weak nations to the developed economies” were dismissed with general mockery.

That prediction has now materialised. Recently, energy and extraction companies have filed a historic level of claims against nations rich and poor, opposing – like the example of the Cumbrian coalmine – state efforts to prevent environmental catastrophe. Corporations have thus far won vast sums through ISDS, of which energy giants have obtained eighty-four billion dollars. That equates to the combined GDP