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Can you perceive our democratic process works? Maybe along the lines of this. The public votes for MPs. They debate and pass bills. When a majority is obtained, the bills are enacted as law. Legislation is upheld by the courts. End of story. However, that’s how it operated in the past. Those days are over.

The Advent of Secret Courts

Today, foreign corporations, along with the wealthy individuals who own them, are able to litigate against nation states for the policies they pass, at secret arbitration panels composed of corporate lawyers. These proceedings take place away from public scrutiny. In contrast to domestic courts, these bodies provide no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, nor can our government, or even companies headquartered in this country. The door is open only to entities operating from foreign soil.

When a secret court determines that a government measure may compromise the corporation’s projected profits, it may order compensation of vast sums, even billions.

This compensation are based not on real financial harm but compensation the arbitrators decide the company would perhaps have made. The administration may have to drop the legislation. It will be deterred from enacting future policies in that area, worried about incurring a lawsuit.

A Mechanism Running Rampant

Unprecedented levels of legal actions are being initiated, as companies observe each other, and private equity fund legal actions for a share of a portion of the awards. The outcome? National sovereignty and democratic governance are turning into unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the rulings taken by parliaments is that this provision has been incorporated – absent public approval, and typically amid an atmosphere of profound opacity – within trade treaties.

A Real-World Instance: The Whitehaven Coalmine

Twelve months ago, a conservation group secured a significant win at the senior court. The judge determined that plans to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had endorsed the extraordinary assertion that the mine could have zero effect on national carbon targets. The incoming administration subsequently revoked the licence the former government had issued. Now, this legal outcome is under threat by an secret arbitration panel accountable to exclusively the corporations petitioning it.

During August, a corporate entity whose beneficial owners are based in the tax haven lodged a claim challenging the UK government. Recently a dispute settlement body in the US capital was convened to consider the case.

The claimant is suing the UK for the revenue it would have generated if the mine had received permission to commence operations. We have no clear indication how much this might be. Which individual is serving as its counsel challenging the UK administration? A member of parliament, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a elected official represents its behalf.

An Oligarch's Case

On the same day that the panel on the coal mine dispute was convened, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. Details are scarce of the case at present, but it appears probable that he’ll use the ISDS mechanism to challenge the restrictions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against Luxembourg with similar intent, claiming $16bn: half that state's yearly income. Included in the legal team acting for him in that case? a prominent lawyer, spouse of the ex-UK leader.

International law scholars contend that the EU’s delay in leveraging immobilised state funds as guarantee for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over elected governments may be obstructing the funds Ukraine critically depends on.

Misleading Claims and Mounting Threats

The public was told that such things wouldn’t happen. In 2014, a former prime minister, championing the biggest and most dangerous of all such treaties, told us: “The UK has signed trade agreement after trade deal and there has not been a case in the past.” An expert on this matter described campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message seemed to be that only poorer nations should be concerned by these lawsuits. Cautionary notes that “when companies grasp the authority they now possess, they will turn their attention from the poorer states to the developed economies” were greeted by general mockery.

That threat has come to pass. Recently, oil and gas and resource corporations have initiated a historic level of cases against nations both wealthy and developing, challenging – similar to the Cumbrian coalmine – official measures to prevent climate breakdown. Companies have to date won $114bn by using ISDS, of which oil majors have been awarded eighty-four billion dollars. That is equivalent to the combined GDP