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What is your perceive our democratic process functions? Maybe similar to this. We elect MPs. They legislate on bills. When a majority is secured, the bills pass into law. Legislation are enforced by the courts. Simple as that. However, that used to be how it operated in the past. Those days are over.

The Emergence of Shadow Courts

In the modern era, international firms, and the oligarchs that control them, have the power to sue nation states for the policies they pass, at private courts made up of commercial attorneys. Such disputes take place in secret. Differing from national judiciaries, these tribunals provide no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. The door is open only to businesses based overseas.

If a tribunal finds that a government measure might diminish the corporation’s projected profits, it can award financial penalties of hundreds of millions, even billions.

This compensation constitute not actual losses but funds the arbitrators determine the company would perhaps have made. The state could be forced to rescind the measure. It is deterred from passing future laws along the same lines, due to the risk of being sued.

A Process Running Rampant

Record numbers of legal actions are being brought, as companies take cues from each other, and private equity fund legal actions in return for a portion of the settlements. The consequence? Sovereignty and democratic governance are turning into unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the choices made by parliaments is that this provision has been inserted – without democratic mandate, and typically amid a climate of profound opacity – within international trade agreements.

A Specific Example: The Whitehaven Coalmine

A year ago, environmental campaigners won a great victory at the high court. The presiding officer ruled that schemes to open the first major coal mine in the UK for a generation, in Cumbria, were found to be wrongly permitted by the previous government, which had agreed to the extraordinary assertion that the mine would have had no impact on climate commitments. The Labour government then withdrew the licence the former government had issued. Now, this legal outcome could be compromised by an foreign court reporting to no one but the corporations filing the suit.

During August, a firm whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. Last week a dispute settlement body in the US capital was set up to adjudicate on it.

The company is seeking compensation from the UK for the money it could have earned if the mine had been allowed to commence operations. The public has no idea how much this could amount to. Who is acting on its behalf challenging the British government? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government makes a decision, the high court validates it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a member of our parliament acts on its behalf.

A Sanctions Lawsuit

Concurrently that the court on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows little of the case to date, but it seems likely that he may employ the tribunal to challenge the restrictions the UK levied against him following the Russian aggression. He has filed a claim against Luxembourg for this reason, claiming a colossal sum: equivalent to half of state's yearly budget. Among the counsel on his side? Cherie Blair, wife of the former British prime minister.

Trade specialists contend that the EU’s delay in leveraging immobilised Russian assets as security for its loan to Ukraine stems from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, secretive influence over elected governments might be preventing the funds Ukraine desperately needs.

Empty Promises and Escalating Risks

The public was told that these events could not occur. Years ago, a senior politician, championing the largest and riskiest of all such treaties, declared: “Britain has agreed to trade deal upon trade deal and there has never been a case in the past.” A consultant on this matter accused activists of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations had to worry about these lawsuits. Warnings that “when companies grasp the authority they now possess, they will turn their attention from the vulnerable countries to the developed economies” were met with general mockery.

That prediction is now a reality. In the current period, fossil fuel and resource corporations have lodged a record number of claims against nations both wealthy and developing, challenging – as in the case of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Corporations have so far won $114bn through ISDS, of which oil majors have secured eighty-four billion dollars. That equates to the combined GDP