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What is your perceive our democratic process works? It could be similar to this. We elect MPs. They vote on bills. Should a majority is secured, the bills pass into law. The law are enforced by the courts. That's it. Well, that used to be how it used to work. No longer.

The Emergence of Shadow Tribunals

Nowadays, overseas companies, and the billionaires who own them, can sue governments for the policies they pass, at private courts composed of commercial attorneys. These proceedings are held away from public scrutiny. In contrast to domestic courts, these tribunals provide no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. They are open solely for corporations operating from foreign soil.

When a secret court finds that a government measure might diminish the corporation’s anticipated profits, it can award financial penalties of hundreds of millions of pounds, potentially billions.

These sums constitute not real financial harm but money the tribunal officials decide the company would perhaps have made. The administration might be compelled to rescind the measure. It is discouraged from enacting future policies along the same lines, worried about facing litigation.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being brought, as companies take cues from each other, and hedge funds fund legal actions in exchange for a portion of the awards. The result? National sovereignty and democracy are turning into prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede a country's own laws and the decisions taken by legislatures is that this stipulation has been incorporated – without democratic mandate, and typically amid a climate of profound opacity – inside trade treaties.

A Concrete Instance: The Whitehaven Coalmine

A year ago, a conservation group secured a significant win at the High Court. The presiding officer ruled that proposals to dig the first deep coalmine in the UK for three decades, in Cumbria, were unlawfully approved by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have no impact on national carbon targets. The incoming administration later cancelled the permission the previous administration had approved. Currently, this victory is under threat by an secret arbitration panel answering to no one but the corporations bringing the case.

In August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit versus the UK government. Last week a dispute settlement body in the United States was convened to hear it.

The claimant is seeking compensation from the UK for the profits it would have generated if the mine had been permitted to proceed. The public has little idea how much this might be. Which individual is acting on its behalf against the state? An elected representative, and previous senior legal advisor in the outgoing administration, the noted patriot the MP. The government passes a law, the high court supports it, then a overseas corporation contests it through an unaccountable arbitration panel, and a member of our parliament represents its behalf.

The Russian Challenge

Simultaneously that the tribunal on the mining lawsuit was appointed, information emerged from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case so far, but it is highly possible that he may employ the ISDS mechanism to challenge the restrictions the UK levied against him subsequent to the invasion of Ukraine. He has already started suing Luxembourg for this reason, demanding a colossal sum: equivalent to half of nation's yearly income. Among the lawyers acting for him in that case? Cherie Blair, wife of the previous PM.

Trade specialists believe that the EU’s procrastination in leveraging immobilised Russian assets as guarantee for its financial support package is due to Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This remarkable, secretive influence over elected governments could be blocking the finance Ukraine urgently requires.

False Assurances and Growing Risks

The public was told that such things were not possible. In 2014, a government leader, championing the largest and riskiest of all such treaties, stated: “Britain has agreed to trade agreement upon trade deal and there has not been a case in the past.” A consultant on this topic described activists of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression appeared to be that solely developing countries should be concerned by ISDS claims. Predictions that “as corporations begin to understand the authority bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were met with scepticism.

That prediction has now materialised. This year, oil and gas and resource corporations have filed a historic level of claims against nations across the economic spectrum, opposing – like the example of the Whitehaven project – state efforts to halt global warming. Firms have to date won vast sums through ISDS, of which oil majors have secured $84bn. That equates to the combined GDP