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Can you perceive our democratic process functions? Maybe similar to this. We elect MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Legislation are enforced by the courts. End of story. Well, that was how it used to work. Those days are over.

The Advent of Secret Courts

Today, international firms, and the wealthy individuals that control them, can sue elected administrations for the laws they pass, at offshore tribunals made up of commercial attorneys. These proceedings take place behind closed doors. Differing from national judiciaries, these bodies grant no avenue for appeal or judicial review. You or I are barred from bringing a case to them, nor can our government, including companies headquartered in this country. Access is granted solely for corporations registered abroad.

When a secret court rules that a legislative action might diminish the corporation’s projected profits, it may order compensation of hundreds of millions, even billions.

These sums are based not on tangible damages but compensation the panel members determine the company could potentially have made. The government could be forced to abandon its policy. It is hesitant to passing future laws of a similar nature, due to the risk of being sued.

A System Running Rampant

Record numbers of cases are being initiated, as corporations observe each other, and investment funds bankroll lawsuits in exchange for a cut of the settlements. The outcome? Sovereignty and popular rule are becoming unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the decisions made by legislatures is that this clause has been inserted – absent public approval, and frequently under conditions of extreme secrecy – inside international trade agreements.

A Concrete Example: The Whitehaven Coalmine

A year ago, environmental campaigners achieved a major legal triumph at the high court. The justice ruled that plans to excavate the first new deep coal mine in the UK for 30 years, in northwest England, were unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine would have zero effect on national carbon targets. The Labour government later cancelled the consent the previous administration had approved. Now, this success is under threat by an offshore tribunal answering to no one but the entities bringing the case.

During August, a company whose final controllers are based in the tax haven initiated proceedings versus the UK government. The previous week a arbitration panel in the United States was convened to hear it.

The claimant is litigating against the UK for the money it might have made if the mine had been allowed to go ahead. We have no clear indication how much this sum represents. What legal team is acting on its behalf against the UK administration? A sitting MP, and former attorney-general in the previous government, that great patriot Geoffrey Cox. The state enacts a policy, the domestic court supports it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the mining lawsuit was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case so far, but it appears probable that he will utilise the ISDS mechanism to challenge the restrictions the UK imposed on him following the Russian aggression. He has already initiated proceedings against Luxembourg with similar intent, claiming $16bn: equivalent to half of government’s yearly income. Included in 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 hesitation in leveraging immobilised Russian assets as collateral for its loan to Ukraine arises from Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a investment pact. This extraordinary, secretive influence over democratic administrations might be preventing the funds Ukraine desperately needs.

Misleading Claims and Escalating Costs

The public was told that these scenarios wouldn’t happen. Years ago, a senior politician, championing the largest and riskiest of all investment pacts, told us: “Britain has agreed to trade deal after trade deal and there has not been a problem in the past.” An expert on this issue accused critics of “scaremongering … in reality, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that exclusively weaker states needed to fear such legal actions. Predictions that “as corporations start to realise the influence bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with scepticism.

That prediction is now a reality. This year, oil and gas and mining firms have filed a record number of cases against nations across the economic spectrum, opposing – similar to the Whitehaven project – state efforts to stop global warming. Companies have to date won one hundred and fourteen billion dollars via ISDS, of which energy giants have obtained $84bn. That equates to the combined GDP