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Can you perceive our democratic process operates? Perhaps along the lines of this. Citizens choose MPs. They vote on bills. Should a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. Simple as that. Yet, that was how it used to work. Those days are over.

The Rise of Secret Arbitration Panels

In the modern era, foreign corporations, and the oligarchs who own them, are able to litigate against governments for the regulations they pass, at secret arbitration panels staffed by business advocates. The cases are held away from public scrutiny. In contrast to domestic courts, these tribunals grant no opportunity to appeal or legal review. The general public are barred from bringing a case to them, just as our government, or even companies operating from this country. Access is granted exclusively to corporations based overseas.

When a secret court finds that a government measure might diminish the corporation’s projected profits, it can award damages of vast sums, potentially billions.

This compensation represent not actual losses but compensation the arbitrators decide the company would perhaps have made. The state may have to drop the legislation. It becomes deterred from enacting future policies of a similar nature, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of disputes are being initiated, as firms take cues from each other, and private equity fund legal actions for a share of a share of the takings. The result? National sovereignty and popular rule are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump a country's own laws and the rulings made by elected bodies is that this provision has been written – without public consent, and often in an atmosphere of profound opacity – into international trade agreements.

A Specific Instance: The Cumbrian Coalmine

Last year, a conservation group secured a significant win at the high court. The judge determined that schemes to dig the first new deep coal mine in the UK for a generation, in northwest England, were found to be unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine would have had zero effect on our carbon budgets. The incoming administration subsequently revoked the consent the Tories had granted. Currently, this success faces being overturned by an offshore tribunal reporting to exclusively the entities petitioning it.

In August, a company whose beneficial owners are based in the Cayman Islands filed a lawsuit versus the UK government. Last week a tribunal in Washington DC was set up to adjudicate on it.

This firm is suing the UK for the profits it would have generated if the mine had received permission to commence operations. The public has no clear indication how much this sum represents. What legal team is representing it in opposition to the British government? A member of parliament, and ex-law officer in the outgoing administration, that great patriot Geoffrey Cox. The government passes a law, the domestic court upholds it, then a overseas corporation contests it through an unaccountable arbitration panel, and a sitting MP acts on its behalf.

A Sanctions Lawsuit

On the same day that the court on the coalmine case was convened, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows scarce of the case at present, but it seems likely that he’ll use the tribunal to challenge the penalties the UK levied against him following the invasion of Ukraine. He has previously initiated proceedings against Luxembourg on these grounds, seeking a colossal sum: equivalent to half of state's yearly income. Part of the counsel representing him there? Cherie Blair, spouse of the former British prime minister.

International law scholars argue that the EU’s delay in using frozen Russian assets as guarantee for its loan to Ukraine stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states could be blocking the money Ukraine critically depends on.

Misleading Claims and Growing Threats

Politicians promised that such things wouldn’t happen. In 2014, a government leader, championing the most significant and hazardous of all these agreements, declared: “We’ve signed investment treaty after trade deal and there has never been a case in the past.” An expert on this topic labelled campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries had to worry about these lawsuits. Predictions that “when companies start to realise the power they’ve been granted, they will redirect their efforts from the weak nations to the strong ones” were dismissed with widespread derision.

That warning has come to pass. This year, fossil fuel and resource corporations have filed a unprecedented number of cases against nations across the economic spectrum, opposing – as in the case of the Whitehaven project – government attempts to prevent climate breakdown. Companies have to date won vast sums by using ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP