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What is your understand our democratic process works? It could be similar to this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills are enacted as law. Legislation are enforced by the courts. That's it. Well, that was how it operated in the past. No longer.

The Rise of Secret Arbitration Panels

Nowadays, overseas companies, or the billionaires that control them, can sue nation states for the policies they pass, at offshore tribunals composed of corporate lawyers. These proceedings are conducted behind closed doors. Unlike our courts, these bodies provide no opportunity to appeal or oversight by judges. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises operating from this country. They are open exclusively to businesses operating from foreign soil.

When a secret court determines that a legislative action could harm the corporation’s projected profits, it may order damages of hundreds of millions of pounds, even billions.

These awards are based not on actual losses but funds the arbitrators decide the company would perhaps have made. The government might be compelled to rescind the measure. It becomes discouraged from introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A Process Spiralling Out of Control

Historically high figures of cases are being initiated, as companies learn from each other, and investment funds bankroll lawsuits for a share of a portion of the takings. The result? Sovereignty and popular rule are turning into too costly.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the rulings enacted by legislatures is that this stipulation has been written – absent public approval, and frequently under an atmosphere of profound opacity – within bilateral investment treaties.

A Specific Instance: The UK Coalmine

Last year, environmental campaigners achieved a major legal triumph at the High Court. The judge determined that plans to excavate the first deep coalmine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have zero effect on national carbon targets. The Labour government later cancelled the licence the previous administration had approved. Now, this success faces being overturned by an offshore tribunal answering to exclusively the companies bringing the case.

In August, a firm whose final controllers are located in the tax haven filed a lawsuit against the UK government. Last week a dispute settlement body in the United States was established to adjudicate on it.

The claimant is suing the UK for the money it would have generated if the mine had received permission to proceed. Citizens have little idea how much this sum represents. Who is representing it challenging the British government? A sitting MP, and ex-law officer in the outgoing administration, the noted patriot Geoffrey Cox. The government enacts a policy, the domestic court supports it, then a foreign company disputes it through an secretive offshore tribunal, and a sitting MP works for its behalf.

The Russian Challenge

Concurrently that the panel on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know scarce of the case to date, but it is highly possible that he may employ the ISDS mechanism to fight the restrictions the UK imposed on him after the Russian aggression. He has previously started suing another European state on these grounds, seeking sixteen billion dollars: an amount representing half nation's yearly budget. Included in the legal team representing him there? Cherie Blair, wife of the former British prime minister.

Trade specialists argue that the EU’s hesitation in using frozen oligarchs' funds as collateral for its aid for Ukraine stems from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, unaccountable authority over sovereign states may be obstructing the money Ukraine desperately needs.

False Assurances and Growing Risks

The public was told that these scenarios could not occur. Previously, a former prime minister, advocating for the largest and riskiest of all such treaties, told us: “We’ve signed investment treaty upon trade deal and we have never seen a issue in the past.” An adviser on this matter accused activists of “scaremongering … the truth is, ISDS has little impact on the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by ISDS claims. Predictions that “once firms begin to understand the influence bestowed upon them, they will shift their focus from the poorer states to the strong ones” were greeted by general mockery.

That prediction has come to pass. This year, fossil fuel and resource corporations have filed a record number of claims against nations rich and poor, challenging – like the example of the UK mine – official measures to prevent environmental catastrophe. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have secured $84bn. That is equivalent to the combined GDP