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How do you perceive our democratic process functions? Perhaps similar to this. Citizens choose MPs. They legislate on bills. If a majority is secured, the bills pass into law. Legislation are enforced by the courts. That's it. Well, that used to be how it once functioned. Those days are over.

The Advent of Secret Tribunals

In the modern era, foreign corporations, along with the wealthy individuals that control them, have the power to sue governments for the policies they pass, at secret arbitration panels staffed by business advocates. Such disputes take place away from public scrutiny. Unlike our courts, these tribunals grant no avenue for appeal or judicial review. You or I are barred from bringing a case to them, just as our government, or even companies headquartered in this country. Access is granted exclusively to businesses registered abroad.

When a secret court finds that a law or policy may compromise the corporation’s anticipated profits, it may order damages of hundreds of millions, running into billions.

These sums represent not actual losses but money the arbitrators decide the company might otherwise have made. The administration may have to rescind the measure. It is hesitant to introducing similar legislation in that area, for fear of incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being filed, as companies observe each other, and investment funds fund legal actions for a share of a share of the takings. The result? National sovereignty and popular rule are becoming unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can supersede domestic law and the choices enacted by parliaments is that this clause has been incorporated – without public consent, and often in conditions of extreme secrecy – into bilateral investment treaties.

A Specific Case: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners achieved a major legal triumph at the high court. The justice determined that proposals to open the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have zero effect on our carbon budgets. The new government later cancelled the consent the Tories had issued. Now, this victory could be compromised by an foreign court reporting to exclusively the corporations filing the suit.

During August, a corporate entity whose ultimate owners reside in the tax haven initiated proceedings challenging the UK government. Last week a dispute settlement body in the US capital was established to consider the case.

This firm is litigating against the UK for the revenue it might have made if the mine had been allowed to proceed. The public has no clear indication how much this sum represents. What legal team is serving as its counsel against the UK administration? A sitting MP, and ex-law officer in the outgoing administration, that great patriot Geoffrey Cox. The administration passes a law, the domestic court supports it, then a international entity contests it through an undemocratic private court, and a sitting MP works for its behalf.

A Sanctions Case

Simultaneously that the court on the coalmine case was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. Details are little of the case so far, but it appears probable that he will utilise the arbitration process to challenge the sanctions the UK imposed on him after the invasion of Ukraine. He has already started suing Luxembourg on these grounds, demanding sixteen billion dollars: half that state's yearly budget. Part of the legal team on his side? a prominent lawyer, married to the former British prime minister.

International law scholars contend that the EU’s hesitation in using frozen state funds as security for its aid for Ukraine is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, secretive influence over sovereign states may be obstructing the money Ukraine critically depends on.

Empty Promises and Growing Risks

The public was told that these scenarios were not possible. In 2014, a former prime minister, advocating for the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to investment treaty upon trade deal and we have never seen a problem in the past.” An expert on this matter accused campaigners of “scaremongering … in reality, ISDS barely touches the UK much”. The prevailing narrative seemed to be that exclusively weaker states had to worry about such legal actions. Warnings that “as corporations start to realise the power they’ve been granted, they will turn their attention from the weak nations to the strong ones” were greeted by general mockery.

That prediction has come to pass. In the current period, energy and extraction companies have filed a unprecedented number of claims against nations across the economic spectrum, challenging – similar to the UK mine – official measures to prevent global warming. Firms have to date won vast sums through ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP