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Can you reckon our democratic process works? Maybe similar to this. Citizens choose MPs. They legislate on bills. When a majority is obtained, the bills pass into law. The law is upheld by the courts. That's it. However, that used to be how it operated in the past. Not anymore.

The Emergence of Secret Courts

Today, overseas companies, along with the wealthy individuals that control them, are able to litigate against governments for the policies they pass, at private courts staffed by commercial attorneys. These proceedings are held in secret. In contrast to domestic courts, these panels grant no avenue for appeal or oversight by judges. You or I are unable to file a case to them, just as our government, including companies operating from this country. Access is granted solely for businesses based overseas.

If a tribunal finds that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant damages of vast sums, even billions.

This compensation constitute not tangible damages but compensation the panel members determine the company could potentially have made. The state might be compelled to abandon its policy. It will be deterred from introducing similar legislation along the same lines, due to the risk of being sued.

A Mechanism Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as companies take cues from each other, and investment funds bankroll lawsuits for a share of a share of the takings. The result? National sovereignty and democracy are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the rulings enacted by legislatures is that this provision has been incorporated – without public consent, and often in conditions of profound opacity – inside bilateral investment treaties.

A Specific Example: The Cumbrian Coal Mine

Twelve months ago, a conservation group won a great victory at the high court. The justice found that schemes to dig the first major coal mine in the UK for a generation, in Cumbria, were wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have no impact on our carbon budgets. The incoming administration subsequently revoked the permission the previous administration had granted. Currently, this victory is under threat by an foreign court answering to only the corporations bringing the case.

Last August, a corporate entity whose final controllers are based in the tax haven filed a lawsuit against the UK government. Last week a arbitration panel in Washington DC was convened to adjudicate on it.

The claimant is suing the UK for the money it could have earned if the mine had been allowed to commence operations. The public has no clear indication how much this could amount to. Who is acting on its behalf challenging the British government? An elected representative, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the domestic court supports it, then a international entity contests it through an secretive arbitration panel, and a member of our parliament works for its behalf.

The Russian Lawsuit

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are little of the case to date, but it appears probable that he may employ the ISDS mechanism to challenge the penalties the UK imposed on him after the Russian aggression. He has filed a claim against a small nation for this reason, seeking a colossal sum: an amount representing half nation's yearly budget. Among the legal team on his side? the wife of a former prime minister, wife of the previous PM.

Legal experts contend that the EU’s hesitation in using frozen Russian assets as guarantee 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 investment pact. This unprecedented, undemocratic power over elected governments might be preventing the funds Ukraine desperately needs.

False Assurances and Growing Risks

The public was told that such things could not occur. Previously, a former prime minister, promoting the biggest and most dangerous of all such treaties, stated: “The UK has signed trade agreement after trade deal and we have never seen a issue in the past.” A consultant on this matter accused activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries needed to fear ISDS claims. Warnings that “when companies grasp the authority they now possess, they will shift their focus from the vulnerable countries to the developed economies” were greeted by general mockery.

That threat has come to pass. This year, energy and resource corporations have filed a historic level of claims against nations across the economic spectrum, opposing – similar to the UK mine – official measures to prevent climate breakdown. Firms have so far won vast sums through ISDS, of which energy giants have been awarded $84bn. That is equivalent to the combined GDP