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What is your reckon our democratic process functions? Perhaps along the lines of this. Citizens choose MPs. They vote on bills. When a majority is achieved, the bills pass into law. Statutes is upheld by the courts. That's it. Well, that’s how it once functioned. No longer.

The Advent of Secret Arbitration Panels

Today, foreign corporations, or the billionaires that control them, have the power to sue governments for the regulations they pass, at private courts staffed by business advocates. The cases are conducted in secret. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. The general public are unable to file a case to them, nor can our government, or even companies based in this country. Access is granted exclusively to corporations based overseas.

When a secret court determines that a legislative action may compromise the corporation’s anticipated profits, it can award compensation of vast sums, even billions.

These sums constitute not actual losses but compensation the panel members conclude the company might otherwise have made. The administration might be compelled to abandon its policy. It will be hesitant to introducing similar legislation of a similar nature, for fear of facing litigation.

A Process Growing Exponentially

Historically high figures of cases are being filed, as corporations observe each other, and hedge funds bankroll lawsuits for a share of a share of the awards. The result? Democratic sovereignty and democratic governance are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the rulings enacted by elected bodies is that this clause has been written – without public consent, and frequently under an atmosphere of profound opacity – within bilateral investment treaties.

A Concrete Example: The Whitehaven Coal Mine

Twelve months ago, a conservation group secured a significant win at the High Court. The justice found that schemes to excavate the first deep coalmine in the UK for a generation, in northwest England, had been illegally sanctioned by the previous government, which had endorsed the extraordinary assertion that the mine would have no consequence on climate commitments. The incoming administration subsequently revoked the permission the Tories had granted. Today, this success faces being overturned by an foreign court accountable to no one but the corporations filing the suit.

During August, a company whose final controllers are based in the offshore financial centre lodged a claim versus the UK government. Recently a arbitration panel in the United States was set up to hear it.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had been allowed to proceed. We have no idea how much this might be. Which individual is serving as its counsel challenging the British government? A member of parliament, and former attorney-general in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the high court validates it, then a foreign company contests it through an unaccountable private court, and a elected official represents its behalf.

An Oligarch's Lawsuit

Concurrently that the court on the coal mine dispute was appointed, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. We know scarce of the case so far, but it appears probable that he will utilise the arbitration process to challenge the restrictions the UK enacted against him subsequent to the war in Ukraine. He has started suing a small nation on these grounds, seeking sixteen billion dollars: half that nation's yearly income. Part of the counsel on his side? the wife of a former prime minister, married to the ex-UK leader.

Legal experts argue that the EU’s delay in using frozen state funds as security for its loan to Ukraine arises from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over elected governments may be obstructing the money Ukraine urgently requires.

False Assurances and Escalating Risks

We were assured that these scenarios wouldn’t happen. In 2014, a former prime minister, advocating for the largest and riskiest of all these agreements, stated: “Britain has agreed to investment treaty after trade deal and there has never been a problem in the past.” A consultant on this issue accused activists of “exaggeration … the truth is, ISDS barely touches the UK much”. The general impression seemed to be that solely developing countries needed to fear ISDS claims. Warnings that “when companies begin to understand the authority bestowed upon them, they will turn their attention from the weak nations to the strong ones” were greeted by general mockery.

That threat is now a reality. Recently, oil and gas and extraction companies have filed a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the UK mine – government attempts to prevent global warming. Firms have to date won vast sums through ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP