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What is your perceive our democratic process functions? Maybe similar to this. Citizens choose MPs. They debate and pass bills. When a majority is obtained, the bills become law. Legislation is maintained by the courts. End of story. Yet, that was how it once functioned. No longer.

The Advent of Secret Arbitration Panels

In the modern era, foreign corporations, and the billionaires behind them, are able to litigate against elected administrations for the laws they pass, at secret arbitration panels made up of commercial attorneys. These proceedings are conducted in secret. Unlike our courts, these bodies allow no avenue for appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, including companies operating from this country. They are open solely for businesses based overseas.

If a tribunal rules that a legislative action may compromise the corporation’s anticipated profits, it has the power to grant damages of vast sums, even billions.

These sums are based not on tangible damages but compensation the panel members decide the company might otherwise have made. The state could be forced to rescind the measure. It will be deterred from introducing similar legislation in that area, worried about being sued.

A Mechanism Spiralling Out of Control

Historically high figures of disputes are being filed, as firms observe each other, and investment funds bankroll lawsuits in exchange for a share of the awards. The consequence? National sovereignty and democratic governance are turning into prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the rulings taken by legislatures is that this provision has been written – without democratic mandate, and often in an atmosphere of extreme secrecy – within international trade agreements.

A Specific Instance: The Whitehaven Coalmine

Twelve months ago, activists won a great victory at the senior court. The presiding officer found that schemes to excavate the first new deep coal mine in the UK for a generation, in northwest England, were illegally sanctioned by the previous government, which had accepted the extraordinary assertion that the mine could have no consequence on national carbon targets. The Labour government subsequently revoked the consent the Tories had issued. Currently, this success faces being overturned by an secret arbitration panel answering to only the entities filing the suit.

In August, a company whose ultimate owners are based in the offshore financial centre filed a lawsuit challenging the UK government. Last week a arbitration panel in Washington DC was convened to consider the case.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had been permitted to go ahead. Citizens have little idea how much this might be. Who is serving as its counsel in opposition to the British government? An elected representative, and previous senior legal advisor in the Conservative government, that great patriot the MP. The state passes a law, the domestic court validates it, then a overseas corporation disputes it through an undemocratic private court, and a member of our parliament acts on its behalf.

The Russian Challenge

Concurrently that the tribunal on the coal mine dispute was established, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. We know nothing of the case at present, but it appears probable that he may employ the ISDS mechanism to challenge the restrictions the UK enacted against him after the invasion of Ukraine. He has previously filed a claim against a small nation with similar intent, demanding sixteen billion dollars: half that state's annual revenue. Part of the legal team on his side? Cherie Blair, married to the former British prime minister.

Legal experts argue that the EU’s hesitation in utilising seized Russian assets as collateral for its financial support package arises from Belgium’s fear that it could be taken to court in the offshore corporate courts, under a trade agreement. This remarkable, undemocratic power over democratic administrations might be preventing the money Ukraine desperately needs.

Misleading Claims and Mounting Threats

We were assured that these events could not occur. In 2014, a senior politician, advocating for the biggest and most dangerous of all these agreements, stated: “The UK has signed trade agreement upon trade deal and there has never been a issue in the past.” An expert on this issue labelled critics of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that solely developing countries had to worry about such legal actions. Warnings that “when companies grasp the authority bestowed upon them, they will turn their attention from the weak nations to the developed economies” were met with widespread derision.

That prediction has now materialised. In the current period, fossil fuel and mining firms have initiated a historic level of cases against nations both wealthy and developing, contesting – as in the case of the Cumbrian coalmine – official measures to stop global warming. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have obtained the majority. That equates to the combined GDP