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What is your reckon our democratic process functions? Perhaps something like this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills pass into law. The law is upheld by the courts. Simple as that. Yet, that’s how it once functioned. Those days are over.

The Emergence of Secret Tribunals

Nowadays, foreign corporations, or the oligarchs that control them, have the power to sue governments for the policies they pass, at secret arbitration panels made up of commercial attorneys. Such disputes are held away from public scrutiny. In contrast to domestic courts, these panels provide no right of appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, or even businesses based in this country. The door is open only to businesses operating from foreign soil.

If a tribunal rules that a law or policy could harm the corporation’s anticipated profits, it may order financial penalties of hundreds of millions, potentially billions.

These awards are based not on actual losses but money the panel members decide the company might otherwise have made. The government might be compelled to rescind the measure. It is discouraged from passing future laws in that area, due to the risk of being sued.

A System Running Rampant

Historically high figures of legal actions are being initiated, as firms observe each other, and investment funds fund legal actions in exchange for a portion of the awards. The outcome? National sovereignty and democracy are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the rulings enacted by legislatures is that this stipulation has been incorporated – absent public approval, and frequently under conditions of total confidentiality – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The justice found that proposals to excavate the first new deep coal mine in the UK for a generation, in Cumbria, were found to be illegally sanctioned by the previous government, which had endorsed the questionable argument that the mine would have had zero effect on climate commitments. The incoming administration then withdrew the permission the former government had approved. Now, this victory could be compromised by an foreign court answering to exclusively the entities bringing the case.

During August, a company whose beneficial owners are based in the tax haven filed a lawsuit against the UK government. Recently a tribunal in Washington DC was established to hear it.

The claimant is litigating against the UK for the revenue it could have earned if the mine had been permitted to go ahead. We have little idea how much this might be. What legal team is serving as its counsel against the state? A sitting MP, and ex-law officer in the Conservative government, the self-proclaimed patriot the MP. The government passes a law, the domestic court upholds it, then a international entity disputes it through an undemocratic offshore tribunal, and a member of our parliament works for its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the mining lawsuit was appointed, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, Mikhail Fridman. The public knows nothing of the case so far, but it seems likely that he’ll use the ISDS mechanism to challenge the restrictions the UK imposed on him subsequent to the invasion of Ukraine. He has already started suing another European state for this reason, claiming $16bn: equivalent to half of government’s yearly budget. Part of the legal team acting for him in that case? Cherie Blair, spouse of the ex-UK leader.

Trade specialists believe that the EU’s delay in utilising seized state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a trade agreement. This remarkable, undemocratic power over elected governments could be blocking the funds Ukraine urgently requires.

Empty Promises and Growing Threats

The public was told that such things could not occur. In 2014, a senior politician, advocating for the biggest and most dangerous of all such treaties, stated: “We’ve signed investment treaty upon trade deal and we have never seen a issue in the past.” An adviser on this matter labelled critics of “scaremongering … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries should be concerned by such legal actions. Warnings that “once firms grasp the authority they now possess, they will redirect their efforts from the weak nations to the developed economies” were greeted by general mockery.

That prediction has come to pass. In the current period, fossil fuel and resource corporations have lodged a historic level of cases against nations across the economic spectrum, challenging – like the example of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Companies have thus far won $114bn by using ISDS, of which oil majors have secured $84bn. That equates to the combined GDP