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How do you perceive our democratic process functions? Maybe something like this. The public votes for MPs. They debate and pass bills. When a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. Simple as that. Well, that was how it once functioned. Those days are over.

The Rise of Secret Courts

Nowadays, overseas companies, and the billionaires behind them, are able to litigate against governments for the policies they pass, at private courts staffed by business advocates. Such disputes take place away from public scrutiny. Unlike our courts, these panels allow no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, just as our government, or even businesses operating from this country. Access is granted only to entities based overseas.

When a secret court finds that a government measure could harm the corporation’s expected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

This compensation represent not actual losses but money the tribunal officials decide the company might otherwise have made. The state could be forced to rescind the measure. It becomes hesitant to passing future laws in that area, for fear of facing litigation.

A Mechanism Spiralling Out of Control

Record numbers of legal actions are being initiated, as corporations observe each other, and investment funds bankroll lawsuits in return for a cut of the takings. The consequence? National sovereignty and popular rule are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it can override domestic law and the decisions taken by parliaments is that this stipulation has been inserted – absent public approval, and frequently under conditions of extreme secrecy – within international trade agreements.

A Specific Case: The Cumbrian Coal Mine

A year ago, a conservation group achieved a major legal triumph at the senior court. The judge determined that proposals to open the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have zero effect on climate commitments. The Labour government subsequently revoked the consent the former government had approved. Today, this victory is under threat by an foreign court answering to exclusively the companies filing the suit.

In August, a company whose ultimate owners reside 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.

This firm is litigating against the UK for the profits it could have earned if the mine had been permitted to proceed. We have no idea how much this might be. What legal team is acting on its behalf in opposition to the British government? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the national judiciary upholds it, then a international entity challenges it through an undemocratic arbitration panel, and a elected official represents its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was established, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are scarce of the case at present, but it appears probable that he will utilise the ISDS mechanism to challenge the penalties the UK imposed on him subsequent to the Russian aggression. He has previously filed a claim against another European state with similar intent, seeking sixteen billion dollars: equivalent to half of government’s yearly budget. Included in the legal team representing him there? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists contend that the EU’s delay in utilising seized oligarchs' funds as guarantee for its loan to Ukraine arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This extraordinary, undemocratic power over elected governments may be obstructing the finance Ukraine desperately needs.

Empty Promises and Escalating Threats

Politicians promised that these scenarios wouldn’t happen. In 2014, a government leader, promoting the largest and riskiest of all investment pacts, told us: “Britain has agreed to investment treaty after trade deal and we have never seen a issue in the past.” A consultant on this topic described campaigners of “scaremongering … the truth is, ISDS has little impact on the UK much”. The general impression appeared to be that solely developing countries had to worry about these lawsuits. Cautionary notes that “as corporations begin to understand the influence they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were dismissed with widespread derision.

That warning is now a reality. Recently, fossil fuel and mining firms have lodged a unprecedented number of claims against nations both wealthy and developing, contesting – as in the case of the UK mine – state efforts to stop environmental catastrophe. Corporations have so far won vast sums through ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP