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Can you perceive our democratic process works? It could be along the lines of this. We elect MPs. They debate and pass bills. When a majority is achieved, the bills become law. Legislation is upheld by the courts. End of story. However, that was how it operated in the past. Not anymore.

The Advent of Secret Courts

Today, foreign corporations, and the wealthy individuals who own them, are able to litigate against elected administrations for the laws they pass, at offshore tribunals made up of corporate lawyers. The cases are conducted behind closed doors. In contrast to domestic courts, these bodies allow no avenue for appeal or judicial review. You or I are unable to file a case to them, just as our government, or even businesses headquartered in this country. The door is open only to businesses based overseas.

Should an arbitration panel determines that a law or policy could harm the corporation’s anticipated profits, it may order compensation of hundreds of millions, potentially billions.

These sums represent not actual losses but compensation the arbitrators determine the company could potentially have made. The government may have to drop the legislation. It will be hesitant to introducing similar legislation in that area, worried about facing litigation.

A Process Spiralling Out of Control

Historically high figures of disputes are being initiated, as companies observe each other, and investment funds finance suits in return for a portion of the awards. The consequence? Sovereignty and popular rule are now prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the rulings made by elected bodies is that this stipulation has been written – absent public approval, and frequently under conditions of total confidentiality – inside trade treaties.

A Specific Example: The Cumbrian Coalmine

Last year, activists achieved a major legal triumph at the High Court. The judge determined that proposals to dig the first new deep coal mine in the UK for 30 years, 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 Labour government then withdrew the permission the previous administration had granted. Now, this victory is under threat by an foreign court accountable to only the companies filing the suit.

Last August, a corporate entity whose ultimate owners reside in the tax haven initiated proceedings versus the UK government. The previous week a arbitration panel in Washington DC was convened to consider the case.

The company is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. We have no idea how much this could amount to. What legal team is acting on its behalf against the state? A sitting MP, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The government passes a law, the national judiciary supports it, then a foreign company disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the mining lawsuit was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. The public knows scarce of the case to date, but it is highly possible that he will utilise the ISDS mechanism to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has initiated proceedings against Luxembourg on these grounds, seeking a colossal sum: half that nation's yearly income. Among the counsel acting for him in that case? a prominent lawyer, married to the ex-UK leader.

Trade specialists contend that the EU’s delay in using frozen Russian assets as collateral for its loan to Ukraine stems from apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over elected governments may be obstructing the finance Ukraine critically depends on.

False Assurances and Growing Threats

We were assured that such things could not occur. Previously, a government leader, promoting the biggest and most dangerous of all these agreements, declared: “We’ve signed investment treaty upon trade deal and we have never seen a issue in the past.” A consultant on this issue accused critics of “exaggeration … the fact is, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states needed to fear such legal actions. Predictions that “when companies start to realise the power they’ve been granted, they will shift their focus from the weak nations to the developed economies” were greeted by general mockery.

That prediction has now materialised. In the current period, oil and gas and extraction companies have initiated a unprecedented number of suits against nations across the economic spectrum, challenging – similar to the Cumbrian coalmine – state efforts to halt environmental catastrophe. Firms have thus far won $114bn via ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP