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What is your perceive our democratic process works? Maybe along the lines of this. Citizens choose MPs. They legislate 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 once functioned. Not anymore.

The Rise of Secret Courts

In the modern era, foreign corporations, and the billionaires that control them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels composed of corporate lawyers. Such disputes are conducted behind closed doors. In contrast to domestic courts, these panels allow no right of appeal or legal review. The general public cannot take a case to them, and neither can our government, or even businesses headquartered in this country. Access is granted solely for corporations registered abroad.

When a secret court rules that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant damages of vast sums, even billions.

This compensation constitute not actual losses but compensation the tribunal officials decide the company could potentially have made. The government might be compelled to abandon its policy. It is hesitant to introducing similar legislation along the same lines, due to the risk of incurring a lawsuit.

A Mechanism Growing Exponentially

Record numbers of legal actions are being brought, as companies learn from each other, and hedge funds fund legal actions in return for a share of the settlements. The result? National sovereignty and democratic governance are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the rulings taken by legislatures is that this stipulation has been inserted – absent public approval, and often in a climate of total confidentiality – within international trade agreements.

A Specific Example: The UK Coalmine

A year ago, activists won a great victory at the high court. The judge ruled that plans to dig the first deep coalmine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no impact on climate commitments. The incoming administration later cancelled the consent the previous administration had issued. Today, this legal outcome could be compromised by an offshore tribunal answering to only the corporations petitioning it.

In August, a company whose final controllers are based in the offshore financial centre lodged a claim challenging the UK government. Recently a tribunal in Washington DC was set up to adjudicate on it.

The company is litigating against the UK for the profits it could have earned if the mine had been permitted to proceed. The public has little idea how much this might be. Which individual is representing it challenging the state? An elected representative, and ex-law officer in the Conservative government, the noted patriot the MP. The government enacts a policy, the high court supports it, then a foreign company disputes it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

The Russian Challenge

On the same day that the panel on the coalmine case was appointed, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows scarce 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 previously initiated proceedings against Luxembourg for this reason, demanding $16bn: equivalent to half of state's yearly income. Included in the legal team representing him there? a prominent lawyer, married to the former British prime minister.

International law scholars contend that the EU’s procrastination in using frozen state funds as security for its aid for Ukraine is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This unprecedented, undemocratic power over democratic administrations may be obstructing the funds Ukraine critically depends on.

False Assurances and Escalating Threats

Politicians promised that such things wouldn’t happen. In 2014, a government leader, advocating for the most significant and hazardous of all these agreements, told us: “We’ve signed trade agreement after trade deal and there has not been a case in the past.” An adviser on this topic accused activists of “exaggeration … in reality, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about such legal actions. Warnings that “as corporations grasp the power they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were met with general mockery.

That threat has come to pass. In the current period, fossil fuel and resource corporations have lodged a historic level of claims against nations across the economic spectrum, contesting – like the example of the Cumbrian coalmine – government attempts to stop climate breakdown. Companies have so far won one hundred and fourteen billion dollars through ISDS, of which oil majors have obtained the majority. That is equivalent to the combined GDP