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How do you reckon our democratic process operates? Perhaps along the lines of this. Citizens choose MPs. They vote on bills. If a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. Simple as that. Yet, that was how it once functioned. No longer.

The Advent of Secret Tribunals

Nowadays, international firms, or the wealthy individuals that control them, can sue governments for the regulations they pass, at secret arbitration panels staffed by commercial attorneys. The cases take place away from public scrutiny. Differing from national judiciaries, these bodies grant no opportunity to appeal or legal review. The general public are barred from bringing a case to them, and neither can our government, or even enterprises operating from this country. They are open only to entities registered abroad.

If a tribunal determines that a legislative action may compromise the corporation’s projected profits, it may order financial penalties of hundreds of millions, running into billions.

These awards represent not real financial harm but money the arbitrators decide the company would perhaps have made. The administration could be forced to drop the legislation. It will be hesitant to passing future laws in that area, worried about facing litigation.

A Process Running Rampant

Historically high figures of cases are being filed, as firms learn from each other, and investment funds bankroll lawsuits in exchange for a cut of the takings. The result? Sovereignty and democratic governance are turning into unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the choices taken by parliaments is that this stipulation has been incorporated – absent public approval, and frequently under an atmosphere of extreme secrecy – into international trade agreements.

A Real-World Instance: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the senior court. The presiding officer ruled that plans to open the first major coal mine in the UK for 30 years, in Cumbria, had been wrongly permitted by the Conservative government, which had endorsed the bizarre claim that the mine could have zero effect on climate commitments. The incoming administration then withdrew the licence the former government had issued. Today, this success faces being overturned by an foreign court accountable to exclusively the corporations petitioning it.

During August, a firm whose final controllers are located in the tax haven filed a lawsuit versus the UK government. The previous week a dispute settlement body in the US capital was set up to hear it.

This firm is suing the UK for the money it might have made if the mine had received permission to proceed. The public has little idea how much this sum represents. Which individual is representing it challenging the British government? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state makes a decision, the domestic court validates it, then a overseas corporation disputes it through an unaccountable private court, and a member of our parliament acts on its behalf.

A Sanctions Challenge

On the same day that the court on the coalmine case was appointed, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. The public knows little of the case so far, but it seems likely that he may employ the arbitration process to challenge the penalties the UK levied against him subsequent to the Russian aggression. He has filed a claim against a small nation with similar intent, demanding $16bn: half that government’s yearly income. Part of the lawyers acting for him in that case? Cherie Blair, wife of the former British prime minister.

Trade specialists contend that the EU’s hesitation in using frozen oligarchs' funds as collateral for its loan to Ukraine is due to Belgium’s fear that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, unaccountable authority over elected governments might be preventing the money Ukraine urgently requires.

Empty Promises and Mounting Threats

The public was told that these events were not possible. Previously, a former prime minister, promoting the largest and riskiest of all these agreements, told us: “We’ve signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this matter accused critics of “alarmism … the truth is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear ISDS claims. Cautionary notes that “when companies start to realise the power they’ve been granted, they will shift their focus from the weak nations to the strong ones” were greeted by scepticism.

That warning has come to pass. Recently, fossil fuel and mining firms have initiated a historic level of suits against nations both wealthy and developing, opposing – like the example of the UK mine – state efforts to prevent climate breakdown. Firms have thus far won vast sums via ISDS, of which energy giants have been awarded the majority. That equates to the combined GDP