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How do you understand our democratic process functions? It could be along the lines of this. The public votes for MPs. They debate and pass bills. If a majority is achieved, the bills are enacted as law. Statutes are enforced by the courts. That's it. Yet, that used to be how it operated in the past. Not anymore.

The Advent of Secret Tribunals

Nowadays, international firms, and the billionaires that control them, are able to litigate against governments for the laws they pass, at private courts staffed by business advocates. These proceedings are conducted in secret. Differing from national judiciaries, these bodies grant no avenue for appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even enterprises based in this country. Access is granted solely for corporations registered abroad.

Should an arbitration panel finds that a law or policy might diminish the corporation’s anticipated profits, it can award financial penalties of vast sums, potentially billions.

These awards represent not real financial harm but compensation the tribunal officials decide the company would perhaps have made. The state could be forced to rescind the measure. It will be discouraged from introducing similar legislation of a similar nature, for fear of being sued.

A Mechanism Growing Exponentially

Record numbers of disputes are being filed, as corporations take cues from each other, and investment funds fund legal actions in exchange for a share of the awards. The result? Sovereignty and democracy are becoming prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede a country's own laws and the choices made by legislatures is that this clause has been written – absent public approval, and frequently under an atmosphere of profound opacity – within bilateral investment treaties.

A Real-World Case: The Cumbrian Coal Mine

A year ago, environmental campaigners won a great victory at the high court. The justice ruled that schemes to open the first deep coalmine in the UK for three decades, in northwest England, were illegally sanctioned by the Conservative government, which had accepted the extraordinary assertion that the mine could have no impact on climate commitments. The Labour government later cancelled the consent the previous administration had granted. Currently, this success could be compromised by an offshore tribunal accountable to exclusively the corporations bringing the case.

In August, a firm whose beneficial owners are based in the tax haven filed a lawsuit versus the UK government. Recently a arbitration panel in the United States was convened to adjudicate on it.

The company is litigating against the UK for the revenue it might have made if the mine had received permission to proceed. Citizens have no clear indication how much this could amount to. What legal team is representing it against the British government? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state makes a decision, the high court upholds it, then a international entity contests it through an unaccountable arbitration panel, and a member of our parliament acts on its behalf.

An Oligarch's Lawsuit

On the same day that the panel on the coalmine case was convened, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. The public knows scarce of the case at present, but it is highly possible that he will utilise the tribunal to challenge the restrictions the UK imposed on him after the war in Ukraine. He has filed a claim against a small nation for this reason, demanding a colossal sum: half that nation's yearly income. Part of the legal team representing him there? Cherie Blair, wife of the previous PM.

International law scholars believe that the EU’s hesitation in leveraging immobilised Russian assets as collateral for its loan to Ukraine is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, secretive influence over sovereign states might be preventing the funds Ukraine urgently requires.

False Assurances and Escalating Threats

We were assured that these events could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all these agreements, declared: “We’ve signed trade deal after trade deal and there has not been a problem in the past.” A consultant on this issue described activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The prevailing narrative appeared to be that exclusively weaker states needed to fear these lawsuits. Predictions that “when companies grasp the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the strong ones” were greeted by widespread derision.

That prediction has now materialised. Recently, energy and resource corporations have initiated a record number of cases against nations across the economic spectrum, opposing – similar to the Cumbrian coalmine – government attempts to halt global warming. Companies have to date won $114bn through ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That is equivalent to the combined GDP