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How do you perceive our democratic process functions? Maybe something like this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. The law is maintained by the courts. Simple as that. However, that used to be how it used to work. Those days are over.

The Rise of Secret Arbitration Panels

Nowadays, foreign corporations, and the oligarchs that control them, can sue elected administrations for the laws they pass, at secret arbitration panels composed of commercial attorneys. These proceedings take place away from public scrutiny. In contrast to domestic courts, these panels allow no right of appeal or legal review. The general public are barred from bringing a case to them, just as our government, or even companies based in this country. The door is open exclusively to entities operating from foreign soil.

If a tribunal determines that a legislative action might diminish the corporation’s projected profits, it has the power to grant damages of vast sums, potentially billions.

These sums represent not real financial harm but money the arbitrators determine the company would perhaps have made. The administration might be compelled to rescind the measure. It becomes deterred from enacting future policies of a similar nature, for fear of being sued.

A Mechanism Spiralling Out of Control

Unprecedented levels of cases are being initiated, as companies take cues from each other, and hedge funds bankroll lawsuits in return for a portion of the settlements. The outcome? Sovereignty and popular rule are turning into prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the decisions made by legislatures is that this provision has been inserted – without public consent, and frequently under a climate of profound opacity – within international trade agreements.

A Specific Instance: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the high court. The judge found that schemes to dig the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved by the previous government, which had endorsed the extraordinary assertion that the mine would have had no consequence on climate commitments. The new government later cancelled the permission the previous administration had granted. Now, this success is under threat by an offshore tribunal answering to only the corporations bringing the case.

In August, a firm whose ultimate owners are located in the Cayman Islands lodged a claim versus the UK government. The previous week a dispute settlement body in Washington DC was established to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it would have generated if the mine had been allowed to go ahead. We have little idea how much this could amount to. Which individual is serving as its counsel challenging the British government? A member of parliament, and ex-law officer in the previous government, the self-proclaimed patriot Geoffrey Cox. The administration passes a law, the high court supports it, then a foreign company challenges it through an secretive offshore tribunal, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the court on the coal mine dispute was convened, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows scarce of the case to date, but it appears probable that he’ll use the ISDS mechanism to contest the sanctions the UK imposed on him after the war in Ukraine. He has started suing Luxembourg on these grounds, claiming $16bn: an amount representing half state's annual revenue. Included in the legal team acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

Legal experts contend that the EU’s procrastination in using frozen oligarchs' funds as collateral for its financial support package is due to Belgium’s fear that it could be sued in the secret arbitration panels, under a investment pact. This remarkable, secretive influence over elected governments could be blocking the money Ukraine critically depends on.

Empty Promises and Mounting Risks

The public was told that these scenarios were not possible. In 2014, a former prime minister, championing the most significant and hazardous of all such treaties, declared: “We’ve signed trade agreement upon trade deal and we have never seen a problem in the past.” An adviser on this matter accused critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The overall message seemed to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “as corporations begin to understand the authority they now possess, they will turn their attention from the vulnerable countries to the developed economies” were met with general mockery.

That warning has now materialised. Recently, fossil fuel and extraction companies have filed a unprecedented number of cases against nations rich and poor, opposing – as in the case of the Cumbrian coalmine – state efforts to halt global warming. Corporations have thus far won vast sums via ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That equates to the combined GDP