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What is your understand our democratic process functions? Maybe similar to this. The public votes for MPs. They debate and pass bills. If a majority is obtained, the bills pass into law. The law are enforced by the courts. Simple as that. However, that used to be how it once functioned. Those days are over.

The Emergence of Secret Courts

Today, foreign corporations, along with the billionaires behind them, have the power to sue elected administrations for the laws they pass, at offshore tribunals staffed by business advocates. These proceedings take place behind closed doors. Differing from national judiciaries, these panels allow no opportunity to appeal or legal review. 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 only to businesses registered abroad.

If a tribunal finds that a law or policy may compromise the corporation’s projected profits, it has the power to grant financial penalties of hundreds of millions, even billions.

This compensation are based not on real financial harm but funds the arbitrators conclude the company might otherwise have made. The state may have to drop the legislation. It will be discouraged from introducing similar legislation in that area, due to the risk of incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of legal actions are being initiated, as corporations learn from each other, and investment funds finance suits in return for a cut of the awards. The consequence? National sovereignty and democracy are becoming prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it can override domestic law and the choices made by legislatures is that this provision has been incorporated – without democratic mandate, and often in conditions of total confidentiality – into trade treaties.

A Specific Instance: The Cumbrian Coalmine

Twelve months ago, activists won a great victory at the senior court. The judge determined that plans to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had accepted the extraordinary assertion that the mine would have no impact on climate commitments. The new government later cancelled the permission the Tories had granted. Now, this victory faces being overturned by an secret arbitration panel answering to no one but the companies filing the suit.

In August, a firm whose ultimate owners are based in the offshore financial centre initiated proceedings against the UK government. Recently a tribunal in the United States was set up to consider the case.

The claimant is litigating against the UK for the revenue it could have earned if the mine had been allowed to proceed. We have little idea how much this might be. Who is representing it challenging the UK administration? An elected representative, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The state passes a law, the domestic court supports it, then a international entity contests it through an undemocratic offshore tribunal, and a member of our parliament works for its behalf.

An Oligarch's Case

On the same day that the panel on the coalmine case was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. The public knows scarce of the case at present, but it seems likely that he’ll use the tribunal to contest the penalties the UK enacted against him after the war in Ukraine. He has previously filed a claim against another European state with similar intent, claiming a colossal sum: equivalent to half of state's yearly budget. Part of the counsel on his side? Cherie Blair, married to the former British prime minister.

Trade specialists contend that the EU’s hesitation in using frozen Russian assets as security 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 elected governments could be blocking the finance Ukraine critically depends on.

Empty Promises and Growing Costs

We were assured that such things were not possible. In 2014, a government leader, advocating for the most significant and hazardous of all these agreements, told us: “We’ve signed investment treaty after trade deal and there has not been a case in the past.” An expert on this topic described campaigners of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression appeared to be that solely developing countries needed to fear such legal actions. Cautionary notes that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the wealthy nations” were dismissed with widespread derision.

That warning has now materialised. Recently, fossil fuel and mining firms have lodged a unprecedented number of cases against nations both wealthy and developing, opposing – as in the case of the UK mine – government attempts to halt climate breakdown. Corporations have thus far won vast sums through ISDS, of which energy giants have secured $84bn. That represents the combined GDP