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What is your reckon our democratic process works? It could be something like this. The public votes for MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. The law is upheld by the courts. End of story. However, that used to be how it once functioned. Not anymore.

The Emergence of Secret Courts

Nowadays, overseas companies, or the billionaires that control them, have the power to sue elected administrations for the policies they pass, at offshore tribunals staffed by corporate lawyers. Such disputes are held in secret. Unlike our courts, these panels provide no right of appeal or legal review. Ordinary citizens cannot take a case to them, and neither can our government, or even businesses operating from this country. The door is open solely for entities operating from foreign soil.

If a tribunal rules that a legislative action might diminish the corporation’s expected profits, it has the power to grant damages of hundreds of millions, potentially billions.

This compensation constitute not tangible damages but money the tribunal officials conclude the company might otherwise have made. The administration may have to drop the legislation. It will be discouraged from passing future laws in that area, for fear of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of disputes are being brought, as firms observe each other, and private equity finance suits in exchange for a cut of the takings. The result? Democratic sovereignty and popular rule are turning into too costly.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to trump domestic law and the decisions enacted by parliaments is that this stipulation has been inserted – absent public approval, and often in a climate of total confidentiality – within trade treaties.

A Specific Instance: The UK Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The judge found that schemes to excavate the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine would have had no impact on our carbon budgets. The Labour government subsequently revoked the consent the previous administration had issued. Currently, this legal outcome could be compromised by an offshore tribunal answering to exclusively the entities petitioning it.

Last August, a corporate entity whose beneficial owners are based in the Cayman Islands filed a lawsuit against the UK government. Last week a dispute settlement body in the United States was set up to adjudicate on it.

This firm is suing the UK for the money it might have made if the mine had been permitted to go ahead. Citizens have little idea how much this sum represents. Who is serving as its counsel in opposition to the state? A member of parliament, and former attorney-general in the Conservative government, the noted patriot Geoffrey Cox. The administration passes a law, the high court supports it, then a foreign company challenges it through an secretive arbitration panel, and a member of our parliament works for its behalf.

An Oligarch's Challenge

Concurrently that the tribunal on the coalmine case was established, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. Details are nothing of the case to date, but it is highly possible that he’ll use the arbitration process to fight the sanctions the UK levied against him after the Russian aggression. He has previously initiated proceedings against another European state with similar intent, seeking sixteen billion dollars: an amount representing half state's yearly budget. Among the lawyers on his side? the wife of a former prime minister, spouse of the former British prime minister.

International law scholars contend that the EU’s procrastination in using frozen oligarchs' funds as security for its financial support package stems from Belgium’s fear that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, secretive influence over elected governments could be blocking the money Ukraine urgently requires.

False Assurances and Growing Threats

We were assured that these scenarios wouldn’t happen. Years ago, a former prime minister, promoting the most significant and hazardous of all these agreements, declared: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” A consultant on this matter accused campaigners of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries should be concerned by such legal actions. Predictions that “when companies begin to understand the power bestowed upon them, they will shift their focus from the poorer states to the wealthy nations” were dismissed with widespread derision.

That warning has come to pass. Recently, energy and resource corporations have initiated a record number of suits against nations rich and poor, opposing – similar to the UK mine – government attempts to stop environmental catastrophe. Corporations have thus far won vast sums via ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP