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What is your perceive our democratic process works? Maybe similar to this. We elect MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. End of story. Yet, that’s how it used to work. Not anymore.

The Emergence of Secret Tribunals

Today, foreign corporations, and the wealthy individuals behind them, are able to litigate against nation states for the regulations they pass, at private courts composed of commercial attorneys. The cases are conducted behind closed doors. Differing from national judiciaries, these tribunals grant no avenue for appeal or oversight by judges. You or I are barred from bringing a case to them, nor can our government, including businesses operating from this country. They are open exclusively to businesses operating from foreign soil.

When a secret court determines that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, running into billions.

These awards represent not actual losses but money the panel members determine the company might otherwise have made. The administration might be compelled to drop the legislation. It is discouraged from introducing similar legislation of a similar nature, for fear of being sued.

A Process Spiralling Out of Control

Historically high figures of disputes are being brought, as corporations observe each other, and investment funds fund legal actions in exchange for a portion of the awards. The outcome? Sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede national legislation and the rulings made by parliaments is that this clause has been written – without public consent, and typically amid an atmosphere of extreme secrecy – within bilateral investment treaties.

A Real-World Example: The Cumbrian Coalmine

Last year, a conservation group achieved a major legal triumph at the high court. The justice ruled that schemes to dig the first new deep coal mine in the UK for 30 years, in Cumbria, were found to be unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine could have no impact on national carbon targets. The new government later cancelled the permission the former government had issued. Today, this victory faces being overturned by an secret arbitration panel answering to only the entities filing the suit.

Last August, a corporate entity whose ultimate owners reside in the offshore financial centre filed a lawsuit against the UK government. Recently a arbitration panel in Washington DC was convened to consider the case.

The company is litigating against the UK for the money it could have earned if the mine had received permission to commence operations. Citizens have no clear indication how much this could amount to. What legal team is representing it in opposition to the state? A member of parliament, and previous senior legal advisor in the previous government, the noted patriot Geoffrey Cox. The government enacts a policy, the national judiciary upholds it, then a overseas corporation contests it through an unaccountable private court, and a sitting MP works for its behalf.

A Sanctions Lawsuit

Concurrently that the tribunal on the coalmine case was appointed, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. Details are nothing of the case at present, but it seems likely that he may employ the ISDS mechanism to contest the penalties the UK enacted against him following the invasion of Ukraine. He has initiated proceedings against Luxembourg on these grounds, seeking $16bn: half that state's yearly budget. Included in the lawyers acting for him in that case? Cherie Blair, spouse of the previous PM.

Trade specialists believe that the EU’s delay in leveraging immobilised state funds as guarantee for its loan to Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, undemocratic power over sovereign states could be blocking the finance Ukraine desperately needs.

Misleading Claims and Escalating Risks

The public was told that such things could not occur. Years ago, a former prime minister, advocating for the largest and riskiest of all investment pacts, told us: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” A consultant on this matter labelled critics of “alarmism … 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. Warnings that “when companies begin to understand the authority they’ve been granted, they will redirect their efforts from the poorer states to the strong ones” were met with scepticism.

That warning has now materialised. This year, fossil fuel and mining firms have lodged a record number of cases against nations both wealthy and developing, opposing – like the example of the Cumbrian coalmine – official measures to prevent global warming. Corporations have to date won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have been awarded $84bn. That represents the combined GDP