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What is your reckon our democratic process functions? Maybe similar to this. The public votes for MPs. They vote on bills. Should a majority is achieved, the bills are enacted as law. Statutes is upheld by the courts. That's it. Yet, that’s how it operated in the past. Those days are over.

The Rise of Secret Courts

In the modern era, foreign corporations, along with the billionaires who own them, can sue nation states for the laws they pass, at offshore tribunals composed of commercial attorneys. Such disputes are conducted in secret. Differing from national judiciaries, these panels grant no opportunity to appeal or legal review. The general public are barred from bringing a case to them, just as our government, or even businesses operating from this country. They are open solely for entities based overseas.

Should an arbitration panel rules that a legislative action could harm the corporation’s expected profits, it can award financial penalties of vast sums, potentially billions.

This compensation constitute not actual losses but money the arbitrators decide the company might otherwise have made. The administration could be forced to rescind the measure. It becomes hesitant to enacting future policies in that area, due to the risk of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Unprecedented levels of disputes are being filed, as corporations take cues from each other, and hedge funds finance suits in return for a portion of the settlements. The outcome? National sovereignty and democratic governance are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it can override national legislation and the rulings made by elected bodies is that this provision has been inserted – without public consent, and often in an atmosphere of extreme secrecy – into bilateral investment treaties.

A Real-World Example: The Cumbrian Coal Mine

Twelve months ago, a conservation group secured a significant win at the high court. The presiding officer determined that proposals to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, were found to be unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine could have no consequence on climate commitments. The incoming administration subsequently revoked the licence the former government had granted. Today, this success could be compromised by an offshore tribunal reporting to exclusively the corporations filing the suit.

During August, a firm whose beneficial owners are located in the offshore financial centre lodged a claim versus the UK government. The previous week a tribunal in the US capital was set up to adjudicate on it.

The company is litigating against the UK for the money it might have made if the mine had been allowed to commence operations. We have no clear indication how much this could amount to. Who is serving as its counsel against the UK administration? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The administration passes a law, the domestic court validates it, then a overseas corporation challenges it through an secretive private court, and a member of our parliament works for its behalf.

A Sanctions Case

Concurrently that the court on the coalmine case was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. Details are little of the case to date, but it appears probable that he will utilise the tribunal to contest the sanctions the UK enacted against him after the invasion of Ukraine. He has previously filed a claim against another European state with similar intent, seeking a colossal sum: an amount representing half government’s annual revenue. Part of the legal team acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

International law scholars argue that the EU’s delay in using frozen oligarchs' funds as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Growing Risks

The public was told that such things wouldn’t happen. Years ago, a senior politician, advocating for the biggest and most dangerous of all such treaties, declared: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” An adviser on this matter labelled activists of “alarmism … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear these lawsuits. Predictions that “as corporations grasp the authority bestowed upon them, they will shift their focus from the vulnerable countries to the wealthy nations” were met with general mockery.

That warning has come to pass. In the current period, oil and gas and resource corporations have initiated a historic level of claims against nations rich and poor, challenging – like the example of the Cumbrian coalmine – state efforts to stop environmental catastrophe. Corporations have so far won $114bn by using ISDS, of which energy giants have been awarded eighty-four billion dollars. That equates to the combined GDP