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What is your understand our democratic process operates? Perhaps along the lines of this. The public votes for MPs. They vote on bills. When a majority is achieved, the bills pass into law. The law is maintained by the courts. Simple as that. Well, that was how it used to work. No longer.

The Rise of Secret Arbitration Panels

Nowadays, overseas companies, along with the billionaires that control them, have the power to sue elected administrations for the regulations they pass, at offshore tribunals staffed by corporate lawyers. Such disputes are conducted away from public scrutiny. Unlike our courts, these panels grant no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, including companies headquartered in this country. Access is granted only to businesses based overseas.

When a secret court determines that a government measure might diminish the corporation’s anticipated profits, it may order damages of hundreds of millions, running into billions.

These sums represent not tangible damages but money the tribunal officials conclude the company might otherwise have made. The government might be compelled to drop the legislation. It is hesitant to introducing similar legislation of a similar nature, due to the risk of facing litigation.

A System Spiralling Out of Control

Record numbers of legal actions are being brought, as companies learn from each other, and investment funds bankroll lawsuits in exchange for a portion of the settlements. The result? Democratic sovereignty and democracy are now prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede national legislation and the rulings taken by legislatures is that this clause has been inserted – without democratic mandate, and often in a climate of extreme secrecy – within bilateral investment treaties.

A Specific Instance: The Cumbrian Coalmine

Last year, activists achieved a major legal triumph at the senior court. The presiding officer determined that proposals to excavate the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine would have zero effect on climate commitments. The incoming administration then withdrew the permission the previous administration had issued. Today, this success faces being overturned by an secret arbitration panel accountable to only the companies filing the suit.

Last August, a corporate entity whose ultimate owners reside in the Cayman Islands initiated proceedings versus the UK government. Recently a arbitration panel in the US capital was set up to adjudicate on it.

The claimant is litigating against the UK for the profits it could have earned if the mine had been allowed to go ahead. We have no idea how much this might be. Who is acting on its behalf challenging the British government? A member of parliament, and previous senior legal advisor in the previous government, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the high court upholds it, then a international entity challenges it through an secretive private court, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

On the same day that the panel on the coal mine dispute was established, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. We know scarce of the case so far, but it is highly possible that he may employ the tribunal to fight the penalties the UK levied against him following the war in Ukraine. He has previously started suing Luxembourg with similar intent, demanding a colossal sum: half that nation's yearly income. Included in the counsel acting for him in that case? the wife of a former prime minister, wife of the ex-UK leader.

International law scholars believe that the EU’s hesitation in utilising seized state funds as guarantee for its financial support package stems from apprehension in Brussels that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over sovereign states may be obstructing the funds Ukraine urgently requires.

False Assurances and Growing Threats

We were assured that these scenarios wouldn’t happen. In 2014, a senior politician, advocating for the most significant and hazardous of all investment pacts, declared: “We’ve signed trade agreement upon trade deal and there has never been a problem in the past.” An expert on this issue labelled activists of “scaremongering … in reality, ISDS barely touches the UK much”. The prevailing narrative seemed to be that solely developing countries had to worry about such legal actions. Cautionary notes that “when companies grasp the influence bestowed upon them, they will shift their focus from the weak nations to the wealthy nations” were met with widespread derision.

That threat has now materialised. Recently, energy and resource corporations have filed a historic level of suits against nations across the economic spectrum, contesting – similar to the Whitehaven project – state efforts to stop climate breakdown. Firms have so far won $114bn through ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That is equivalent to the combined GDP