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What is your understand our democratic process works? Maybe something like this. The public votes for MPs. They legislate on bills. Should a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. Well, that was how it used to work. No longer.

The Advent of Shadow Courts

In the modern era, international firms, or the billionaires behind them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels staffed by commercial attorneys. These proceedings are held away from public scrutiny. Unlike our courts, these tribunals allow no right of 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 entities operating from foreign soil.

Should an arbitration panel determines that a law or policy may compromise the corporation’s projected profits, it may order damages of vast sums, even billions.

These sums constitute not tangible damages but funds the arbitrators determine the company might otherwise have made. The state may have to abandon its policy. It will be deterred from enacting future policies along the same lines, for fear of facing litigation.

A Mechanism Running Rampant

Record numbers of legal actions are being brought, as companies take cues from each other, and private equity bankroll lawsuits for a share of a share of the awards. The result? National sovereignty and democracy are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the rulings taken by legislatures is that this clause has been written – absent public approval, and often in an atmosphere of extreme secrecy – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coalmine

Twelve months ago, a conservation group secured a significant win at the high court. The justice determined that schemes to dig the first major coal mine in the UK for a generation, in Cumbria, were found to be illegally sanctioned by the previous government, which had agreed to the extraordinary assertion that the mine could have no impact on our carbon budgets. The incoming administration subsequently revoked the licence the former government had approved. Now, this victory faces being overturned by an secret arbitration panel accountable to no one but the entities bringing the case.

Last August, a company whose final controllers reside in the tax haven initiated proceedings challenging the UK government. Last week a tribunal in Washington DC was set up to consider the case.

The company is seeking compensation from the UK for the money it could have earned if the mine had been permitted to go ahead. Citizens have no idea how much this might be. What legal team is acting on its behalf challenging the state? A sitting MP, and ex-law officer in the Conservative government, the noted patriot Geoffrey Cox. The state makes a decision, the high court validates it, then a foreign company contests it through an undemocratic private court, and a elected official acts on its behalf.

The Russian Challenge

Concurrently that the panel on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case at present, but it is highly possible that he will utilise the ISDS mechanism to challenge the restrictions the UK enacted against him following the Russian aggression. He has previously started suing Luxembourg on these grounds, seeking $16bn: half that state's annual revenue. Part of the lawyers on his side? Cherie Blair, wife of the previous PM.

Legal experts argue that the EU’s delay in utilising seized state funds as security for its loan to Ukraine is due to Belgium’s fear that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations could be blocking the finance Ukraine urgently requires.

False Assurances and Escalating Threats

We were assured that these scenarios were not possible. Years ago, a senior politician, promoting the most significant and hazardous of all such treaties, declared: “We’ve signed trade deal after trade deal and there has not been a issue in the past.” A consultant on this issue described critics of “scaremongering … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries had to worry about ISDS claims. Cautionary notes that “as corporations grasp the power they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were met with scepticism.

That warning has now materialised. In the current period, energy and resource corporations have lodged a record number of claims against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – state efforts to stop climate breakdown. Corporations have so far won $114bn through ISDS, of which fossil fuel companies have secured the majority. That is equivalent to the combined GDP