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What is your understand our democratic process works? It could be something like this. We elect MPs. They debate and pass bills. Should a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. Simple as that. Well, that was how it once functioned. Those days are over.

The Emergence of Shadow Tribunals

Today, international firms, or the oligarchs who own them, are able to litigate against nation states for the laws they pass, at offshore tribunals composed of business advocates. These proceedings are conducted in secret. Differing from national judiciaries, these panels grant no avenue for appeal or oversight by judges. Ordinary citizens cannot take a case to them, just as our government, including companies headquartered in this country. The door is open solely for businesses operating from foreign soil.

When a secret court finds that a law or policy could harm the corporation’s anticipated profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

These awards constitute not actual losses but money the tribunal officials determine the company would perhaps have made. The government may have to rescind the measure. It will be hesitant to enacting future policies of a similar nature, for fear of facing litigation.

A Mechanism Running Rampant

Historically high figures of disputes are being brought, as firms take cues from each other, and investment funds finance suits for a share of a share of the settlements. The consequence? National sovereignty and democratic governance are turning into unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it can trump a country's own laws and the choices enacted by elected bodies is that this provision has been incorporated – without democratic mandate, and often in a climate of profound opacity – into international trade agreements.

A Specific Example: The Cumbrian Coalmine

Last year, a conservation group won a great victory at the senior court. The justice determined that schemes to excavate the first deep coalmine in the UK for three decades, in northwest England, had been unlawfully approved by the Conservative government, which had agreed to the questionable argument that the mine would have no impact on our carbon budgets. The incoming administration then withdrew the permission the former government had granted. Today, this legal outcome is under threat by an foreign court answering to no one but the entities filing the suit.

During August, a corporate entity whose final controllers reside in the offshore financial centre filed a lawsuit versus the UK government. Recently a arbitration panel in the US capital was convened to hear it.

This firm is litigating against the UK for the profits it could have earned if the mine had been allowed to go ahead. We have little idea how much this sum represents. Which individual is serving as its counsel in opposition to the UK administration? A member of parliament, and ex-law officer in the Conservative government, that great patriot the MP. The government enacts a policy, the domestic court upholds it, then a foreign company contests it through an unaccountable arbitration panel, and a member of our parliament represents its behalf.

The Russian Challenge

Concurrently that the tribunal on the coalmine case was established, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. We know scarce of the case to date, but it appears probable that he may employ the ISDS mechanism to challenge the restrictions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against a small nation with similar intent, demanding $16bn: half that government’s yearly budget. Among the counsel on his side? Cherie Blair, married to the ex-UK leader.

Trade specialists argue that the EU’s procrastination in using frozen oligarchs' funds as collateral for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, undemocratic power over elected governments might be preventing the finance Ukraine desperately needs.

Empty Promises and Mounting Costs

The public was told that such things could not occur. Years ago, a former prime minister, championing the largest and riskiest of all investment pacts, declared: “We’ve signed investment treaty after trade deal and there has never been a issue in the past.” A consultant on this issue described activists of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression was crafted to be that solely developing countries needed to fear ISDS claims. Predictions that “as corporations start to realise the influence they now possess, they will turn their attention from the weak nations to the wealthy nations” were met with general mockery.

That prediction is now a reality. In the current period, fossil fuel and resource corporations have lodged a unprecedented number of claims against nations both wealthy and developing, challenging – as in the case of the Whitehaven project – official measures to stop climate breakdown. Corporations have so far won vast sums by using ISDS, of which fossil fuel companies have obtained $84bn. That equates to the combined GDP