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How do you reckon our democratic process operates? Maybe something like this. The public votes for MPs. They vote on bills. Should a majority is secured, the bills pass into law. The law is maintained by the courts. That's it. Well, that used to be how it operated in the past. No longer.

The Rise of Secret Tribunals

Nowadays, foreign corporations, along with the wealthy individuals behind them, have the power to sue governments for the laws they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held behind closed doors. Unlike our courts, these tribunals grant no right of appeal or judicial review. You or I cannot take a case to them, nor can our government, including businesses based in this country. They are open exclusively to businesses based overseas.

When a secret court finds that a legislative action might diminish the corporation’s expected profits, it may order financial penalties of hundreds of millions of pounds, potentially billions.

These sums constitute not actual losses but money the tribunal officials determine the company would perhaps have made. The government might be compelled to abandon its policy. It is deterred from passing future laws along the same lines, due to the risk of facing litigation.

A System Running Rampant

Record numbers of cases are being initiated, as companies observe each other, and investment funds fund legal actions for a share of a cut of the takings. The consequence? National sovereignty and democratic governance are turning into prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede national legislation and the rulings enacted by parliaments is that this provision has been incorporated – without public consent, and frequently under an atmosphere of total confidentiality – within bilateral investment treaties.

A Concrete Case: The Whitehaven Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The judge determined that schemes to dig the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the previous government, which had endorsed the extraordinary assertion that the mine would have had no consequence on national carbon targets. The new government later cancelled the permission the former government had granted. Today, this success faces being overturned by an secret arbitration panel accountable to only the corporations filing the suit.

In August, a company whose beneficial owners are based in the offshore financial centre initiated proceedings versus the UK government. Recently a tribunal in Washington DC was set up to hear it.

The company is seeking compensation from the UK for the profits it could have earned if the mine had been allowed to go ahead. The public has no clear indication how much this could amount to. What legal team is representing it against the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The government makes a decision, the domestic court upholds it, then a international entity contests it through an undemocratic private court, and a sitting MP works for its behalf.

The Russian Challenge

Simultaneously that the court on the coal mine dispute was established, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. We know nothing of the case at present, but it is highly possible that he’ll use the tribunal to challenge the restrictions the UK imposed on him following the Russian aggression. He has filed a claim against a small nation on these grounds, claiming a colossal sum: equivalent to half of state's yearly budget. Included in the lawyers representing him there? Cherie Blair, wife of the ex-UK leader.

Trade specialists believe that the EU’s procrastination in utilising seized Russian assets as collateral for its loan to Ukraine arises from Belgium’s fear that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This remarkable, secretive influence over elected governments might be preventing the funds Ukraine desperately needs.

Empty Promises and Growing Threats

We were assured that such things wouldn’t happen. In 2014, a former prime minister, advocating for the largest and riskiest of all investment pacts, declared: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this issue accused critics of “exaggeration … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries had to worry about these lawsuits. Warnings that “when companies start to realise the power they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were dismissed with general mockery.

That threat is now a reality. In the current period, fossil fuel and resource corporations have initiated a unprecedented number of claims against nations rich and poor, opposing – similar to the UK mine – state efforts to stop global warming. Firms have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained the majority. That equates to the combined GDP