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What is your perceive our democratic process works? Perhaps something like this. We elect MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. The law are enforced by the courts. That's it. However, that used to be how it once functioned. Those days are over.

The Advent of Secret Tribunals

In the modern era, international firms, and the billionaires behind them, can sue governments for the policies they pass, at offshore tribunals staffed by corporate lawyers. Such disputes are held away from public scrutiny. Differing from national judiciaries, these panels allow no opportunity to appeal or legal review. You or I are unable to file a case to them, nor can our government, or even businesses headquartered in this country. They are open exclusively to entities registered abroad.

If a tribunal determines that a law or policy might diminish the corporation’s projected profits, it may order damages of vast sums, even billions.

This compensation constitute not actual losses but funds the panel members decide the company could potentially have made. The state may have to drop the legislation. It is discouraged from passing future laws in that area, for fear of being sued.

A Process Growing Exponentially

Record numbers of cases are being initiated, as firms learn from each other, and investment funds finance suits in exchange for a portion of the settlements. The consequence? National sovereignty and democratic governance are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override domestic law and the choices taken by elected bodies is that this clause has been inserted – absent public approval, and typically amid conditions of extreme secrecy – inside bilateral investment treaties.

A Real-World Example: The UK Coal Mine

Twelve months ago, a conservation group won a great victory at the High Court. The presiding officer determined that plans to open the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine would have had no consequence on national carbon targets. The new government subsequently revoked the licence the former government had issued. Now, this victory faces being overturned by an secret arbitration panel reporting to exclusively the companies bringing the case.

During August, a company whose beneficial owners are located in the Cayman Islands filed a lawsuit against the UK government. Last week a tribunal in the US capital was established to consider the case.

The claimant is litigating against the UK for the revenue it might have made if the mine had been allowed to proceed. We have no clear indication how much this sum represents. Which individual is acting on its behalf against the British government? A member of parliament, and ex-law officer in the previous government, the self-proclaimed patriot the MP. The state passes a law, the domestic court upholds it, then a foreign company challenges it through an secretive arbitration panel, and a member of our parliament works for its behalf.

A Sanctions Case

On the same day that the court on the coal mine dispute was established, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. We know nothing of the case at present, but it is highly possible that he’ll use the tribunal to fight the restrictions the UK imposed on him following the invasion of Ukraine. He has filed a claim against Luxembourg for this reason, claiming $16bn: equivalent to half of government’s yearly income. Part of the lawyers acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

Trade specialists argue that the EU’s delay in using frozen oligarchs' funds as security for its financial support package arises from Belgium’s fear that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states might be preventing the finance Ukraine desperately needs.

Misleading Claims and Mounting Costs

Politicians promised that these scenarios wouldn’t happen. Previously, a former prime minister, championing the largest and riskiest of all these agreements, stated: “The UK has signed trade deal after trade deal and there has never been a problem in the past.” An expert on this topic labelled campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “as corporations begin to understand the authority they now possess, they will turn their attention from the poorer states to the wealthy nations” were dismissed with widespread derision.

That threat has now materialised. In the current period, oil and gas and extraction companies have filed a historic level of claims against nations both wealthy and developing, challenging – as in the case of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Companies have to date won vast sums through ISDS, of which energy giants have secured $84bn. That equates to the combined GDP