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How do you understand our democratic process functions? Perhaps along the lines of this. The public votes for MPs. They vote on bills. When a majority is secured, the bills become law. The law are enforced by the courts. That's it. Well, that’s how it operated in the past. No longer.

The Rise of Secret Tribunals

Today, international firms, or the billionaires that control them, have the power to sue governments for the laws they pass, at secret arbitration panels composed of corporate lawyers. Such disputes are held behind closed doors. Differing from national judiciaries, these tribunals grant no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, nor can our government, or even businesses headquartered in this country. The door is open solely for businesses operating from foreign soil.

If a tribunal finds that a law or policy may compromise the corporation’s projected profits, it may order compensation of hundreds of millions, running into billions.

These awards represent not actual losses but compensation the tribunal officials decide the company could potentially have made. The state might be compelled to abandon its policy. It becomes deterred from enacting future policies in that area, worried about facing litigation.

A Process Spiralling Out of Control

Historically high figures of disputes are being filed, as corporations learn from each other, and investment funds bankroll lawsuits in exchange for a cut of the awards. The consequence? National sovereignty and democracy are now too costly.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the decisions enacted by legislatures is that this clause has been inserted – absent public approval, and typically amid an atmosphere of total confidentiality – into international trade agreements.

A Concrete Case: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the senior court. The judge determined that schemes to dig the first major coal mine in the UK for a generation, in Cumbria, had been wrongly permitted by the previous government, which had endorsed the questionable argument that the mine would have no impact on our carbon budgets. The Labour government later cancelled the permission the Tories had granted. Today, this legal outcome could be compromised by an foreign court accountable to only the corporations bringing the case.

During August, a corporate entity whose ultimate owners reside in the Cayman Islands initiated proceedings versus the UK government. Last week a tribunal in Washington DC was set up to consider the case.

The company is suing the UK for the revenue it might have made if the mine had been allowed to proceed. We have little idea how much this sum represents. What legal team is representing it against the UK administration? A sitting MP, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot the MP. The state enacts a policy, the national judiciary validates it, then a international entity disputes it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the panel on the coal mine dispute was convened, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. The public knows nothing of the case to date, but it appears probable that he’ll use the arbitration process to challenge the penalties the UK imposed on him subsequent to the war in Ukraine. He has previously initiated proceedings against another European state for this reason, claiming a colossal sum: equivalent to half of state's yearly income. Included in the legal team on his side? the wife of a former prime minister, spouse of the former British prime minister.

Trade specialists believe that the EU’s hesitation in using frozen Russian assets as guarantee for its aid for Ukraine stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This unprecedented, undemocratic power over elected governments may be obstructing the finance Ukraine urgently requires.

Empty Promises and Escalating Risks

The public was told that such things were not possible. Previously, a senior politician, championing the most significant and hazardous of all such treaties, stated: “Britain has agreed to investment treaty upon trade deal and there has not been a issue in the past.” A consultant on this topic accused campaigners of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “once firms begin to understand the power they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” were met with widespread derision.

That threat has come to pass. Recently, energy and resource corporations have filed a unprecedented number of cases against nations rich and poor, challenging – like the example of the Cumbrian coalmine – official measures to stop global warming. Corporations have to date won $114bn via ISDS, of which oil majors have secured $84bn. That equates to the combined GDP