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What is your understand our democratic process operates? It could be something like this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills become law. The law are enforced by the courts. That's it. Yet, that was how it operated in the past. No longer.

The Advent of Shadow Arbitration Panels

In the modern era, foreign corporations, along with the wealthy individuals that control them, have the power to sue governments for the laws they pass, at private courts composed of corporate lawyers. These proceedings are held behind closed doors. Unlike our courts, these panels provide no right of appeal or judicial review. The general public are barred from bringing a case to them, nor can our government, including enterprises based in this country. They are open only to entities based overseas.

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

This compensation constitute not real financial harm but money the arbitrators decide the company might otherwise have made. The state could be forced to rescind the measure. It becomes deterred from introducing similar legislation along the same lines, for fear of incurring a lawsuit.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being brought, as firms learn from each other, and investment funds finance suits in exchange for a portion of the settlements. The result? National sovereignty and popular rule are now too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the choices enacted by elected bodies is that this stipulation has been written – without public consent, and often in conditions of extreme secrecy – within bilateral investment treaties.

A Real-World Instance: The Whitehaven Coalmine

A year ago, activists achieved a major legal triumph at the senior court. The presiding officer determined that schemes to dig the first deep coalmine in the UK for a generation, in Cumbria, had been unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine would have no consequence on our carbon budgets. The Labour government then withdrew the permission the previous administration had approved. Now, this legal outcome could be compromised by an secret arbitration panel accountable to exclusively the corporations bringing the case.

Last August, a company whose beneficial owners are based in the tax haven lodged a claim challenging the UK government. Recently a arbitration panel in the United States was set up to hear it.

The claimant is suing the UK for the revenue it might have made if the mine had been allowed to go ahead. Citizens have little idea how much this could amount to. Which individual is acting on its behalf against the UK administration? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a elected official acts on its behalf.

A Sanctions Lawsuit

On the same day that the panel on the mining lawsuit was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are nothing of the case at present, but it seems likely that he will utilise the ISDS mechanism to challenge the penalties the UK levied against him after the war in Ukraine. He has already filed a claim against a small nation with similar intent, claiming a colossal sum: an amount representing half state's yearly income. Part of the counsel on his side? Cherie Blair, spouse of the former British prime minister.

Trade specialists argue that the EU’s procrastination in using frozen Russian assets as collateral for its financial support package arises from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This extraordinary, undemocratic power over democratic administrations may be obstructing the finance Ukraine critically depends on.

Misleading Claims and Growing Costs

The public was told that these scenarios wouldn’t happen. In 2014, a senior politician, championing the most significant and hazardous of all these agreements, told us: “We’ve signed trade agreement after trade deal and we have never seen a case in the past.” An expert on this matter accused critics of “scaremongering … in reality, ISDS barely touches the UK much”. The general impression appeared to be that exclusively weaker states had to worry about such legal actions. Predictions that “when companies grasp the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were dismissed with general mockery.

That warning is now a reality. In the current period, fossil fuel and resource corporations have initiated a record number of cases against nations across the economic spectrum, challenging – similar to the Cumbrian coalmine – government attempts to stop climate breakdown. Firms have thus far won $114bn via ISDS, of which energy giants have secured eighty-four billion dollars. That equates to the combined GDP