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What is your reckon our democratic process functions? It could be along the lines of this. Citizens choose MPs. They legislate on bills. When a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. End of story. However, that was how it once functioned. No longer.

The Emergence of Secret Tribunals

Today, international firms, or the wealthy individuals behind them, can sue governments for the policies they pass, at secret arbitration panels staffed by commercial attorneys. Such disputes take place behind closed doors. Differing from national judiciaries, these panels allow no opportunity to appeal or judicial review. Ordinary citizens are barred from bringing a case to them, just as our government, or even companies headquartered in this country. Access is granted solely for corporations registered abroad.

If a tribunal finds that a legislative action could harm the corporation’s anticipated profits, it may order compensation of hundreds of millions, even billions.

These awards represent not tangible damages but money the tribunal officials decide the company might otherwise have made. The state might be compelled to drop the legislation. It is discouraged from introducing similar legislation in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of disputes are being brought, as corporations learn from each other, and investment funds fund legal actions for a share of a portion of the takings. The result? National sovereignty and popular rule are becoming too costly.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede national legislation and the choices taken by elected bodies is that this provision has been inserted – absent public approval, and typically amid conditions of profound opacity – inside bilateral investment treaties.

A Concrete Example: The Cumbrian Coalmine

A year ago, environmental campaigners achieved a major legal triumph at the senior court. The judge ruled that proposals to dig the first major coal mine in the UK for 30 years, in northwest England, were found to be wrongly permitted by the outgoing administration, which had accepted the bizarre claim that the mine could have zero effect on climate commitments. The incoming administration subsequently revoked the consent the Tories had approved. Currently, this legal outcome faces being overturned by an secret arbitration panel answering to only the corporations bringing the case.

During August, a corporate entity whose final controllers are located in the offshore financial centre filed a lawsuit against the UK government. Recently a arbitration panel in the United States was convened to adjudicate on it.

The company is litigating against the UK for the profits it might have made if the mine had been permitted to go ahead. Citizens have no idea how much this could amount to. Who is acting on its behalf challenging the state? A sitting MP, and ex-law officer in the previous government, the noted patriot Geoffrey Cox. The state makes a decision, the high court validates it, then a foreign company contests it through an unaccountable offshore tribunal, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the coalmine case was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know little of the case at present, but it is highly possible that he will utilise the ISDS mechanism to challenge the restrictions the UK levied against him subsequent to the Russian aggression. He has previously filed a claim against another European state with similar intent, seeking sixteen billion dollars: half that nation's yearly budget. Included in the counsel representing him there? Cherie Blair, married to the ex-UK leader.

International law scholars argue that the EU’s procrastination in leveraging immobilised state funds as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over elected governments could be blocking the finance Ukraine desperately needs.

Misleading Claims and Growing Threats

We were assured that such things wouldn’t happen. In 2014, a government leader, promoting the biggest and most dangerous of all these agreements, declared: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” An expert on this issue labelled critics of “alarmism … the truth is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that solely developing countries had to worry about such legal actions. Predictions that “once firms grasp the influence bestowed upon them, they will turn their attention from the poorer states to the wealthy nations” were met with widespread derision.

That prediction has now materialised. Recently, energy and resource corporations have filed a record number of cases against nations across the economic spectrum, challenging – like the example of the UK mine – official measures to stop environmental catastrophe. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have secured the majority. That represents the combined GDP