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What is your perceive our democratic process functions? Maybe along the lines of this. We elect MPs. They legislate on bills. Should a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. That's it. Well, that’s how it operated in the past. Not anymore.

The Rise of Shadow Tribunals

Nowadays, foreign corporations, or the billionaires that control them, can sue nation states for the policies they pass, at private courts composed of business advocates. These proceedings take place behind closed doors. In contrast to domestic courts, these bodies provide no opportunity to appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, or even companies operating from this country. Access is granted exclusively to corporations operating from foreign soil.

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

This compensation are based not on actual losses but compensation the tribunal officials determine the company would perhaps have made. The government could be forced to rescind the measure. It will be deterred from passing future laws in that area, worried about incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of cases are being filed, as corporations learn from each other, and private equity bankroll lawsuits for a share of a share of the settlements. The outcome? Democratic sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump national legislation and the decisions taken by elected bodies is that this provision has been inserted – without democratic mandate, and frequently under a climate of profound opacity – into bilateral investment treaties.

A Real-World Example: The Cumbrian Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The presiding officer ruled that proposals to excavate the first major coal mine in the UK for three decades, in Cumbria, were wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine could have no consequence on national carbon targets. The new government later cancelled the consent the former government had issued. Today, this victory is under threat by an secret arbitration panel accountable to only the companies bringing the case.

During August, a company whose final controllers are based in the offshore financial centre filed a lawsuit versus the UK government. Last week a arbitration panel in the United States was set up to hear it.

This firm is litigating against the UK for the profits it could have earned if the mine had been permitted to go ahead. The public has no clear indication how much this might be. Which individual is representing it challenging the British government? A sitting MP, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The administration makes a decision, the national judiciary validates it, then a foreign company disputes it through an undemocratic arbitration panel, and a elected official works for its behalf.

A Sanctions Challenge

Simultaneously that the panel on the coalmine case was convened, information emerged from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. Details are scarce of the case at present, but it is highly possible that he may employ the tribunal to fight the penalties the UK imposed on him following the war in Ukraine. He has already initiated proceedings against Luxembourg on these grounds, claiming sixteen billion dollars: equivalent to half of state's yearly income. Part of the legal team on his side? Cherie Blair, married to the previous PM.

International law scholars argue that the EU’s delay in utilising seized state funds as security for its financial support package arises from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, unaccountable authority over sovereign states could be blocking the money Ukraine critically depends on.

Empty Promises and Mounting Risks

We were assured that such things were not possible. Previously, a government leader, promoting the most significant and hazardous of all such treaties, told us: “Britain has agreed to investment treaty after trade deal and there has not been a problem in the past.” An adviser on this topic labelled activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message appeared to be that exclusively weaker states had to worry about such legal actions. Warnings that “as corporations grasp the influence they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were met with general mockery.

That warning is now a reality. This year, oil and gas and mining firms have filed a unprecedented number of claims against nations both wealthy and developing, challenging – like the example of the UK mine – official measures to prevent environmental catastrophe. Corporations have to date won vast sums through ISDS, of which energy giants have secured the majority. That equates to the combined GDP