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Can you reckon our democratic process works? Perhaps something like this. The public votes for MPs. They legislate on bills. If a majority is achieved, the bills become law. The law is upheld by the courts. Simple as that. Yet, that used to be how it once functioned. Those days are over.

The Emergence of Secret Courts

In the modern era, international firms, along with the wealthy individuals that control them, are able to litigate against governments for the laws they pass, at offshore tribunals composed of business advocates. The cases are held in secret. Unlike our courts, these tribunals grant no avenue for appeal or oversight by judges. You or I are unable to file a case to them, and neither can our government, including businesses based in this country. The door is open exclusively to businesses operating from foreign soil.

When a secret court determines that a government measure may compromise the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, potentially billions.

This compensation constitute not actual losses but compensation the tribunal officials determine the company might otherwise have made. The state might be compelled to rescind the measure. It becomes hesitant to enacting future policies in that area, for fear of incurring a lawsuit.

A Mechanism Running Rampant

Record numbers of disputes are being initiated, as corporations observe each other, and private equity finance suits in exchange for a share of the settlements. The consequence? Democratic sovereignty and democracy are becoming too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede domestic law and the decisions made by legislatures is that this provision has been incorporated – without public consent, and often in an atmosphere of profound opacity – within international trade agreements.

A Real-World Case: The Whitehaven Coalmine

Twelve months ago, activists achieved a major legal triumph at the High Court. The judge determined that proposals to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been illegally sanctioned by the outgoing administration, which had accepted the extraordinary assertion that the mine could have no impact on climate commitments. The Labour government later cancelled the permission the previous administration had issued. Now, this success is under threat by an offshore tribunal accountable to only the corporations petitioning it.

During August, a corporate entity whose final controllers are located in the Cayman Islands initiated proceedings against the UK government. Recently a arbitration panel in Washington DC was set up to consider the case.

The company is suing the UK for the profits it would have generated if the mine had been allowed to commence operations. The public has no clear indication how much this might be. Which individual is representing it in opposition to the UK administration? A member of parliament, and previous senior legal advisor in the Conservative government, the noted patriot Geoffrey Cox. The government enacts a policy, the high court supports it, then a foreign company contests it through an secretive arbitration panel, and a elected official represents its behalf.

The Russian Challenge

Concurrently that the panel on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. The public knows little of the case at present, but it seems likely that he’ll use the arbitration process to contest the sanctions the UK imposed on him following the Russian aggression. He has already started suing another European state on these grounds, seeking $16bn: an amount representing half government’s annual revenue. Part of the legal team on his side? Cherie Blair, married to the former British prime minister.

International law scholars believe that the EU’s procrastination in utilising seized Russian assets as security for its loan to Ukraine stems from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a investment pact. This unprecedented, secretive influence over elected governments might be preventing the money Ukraine desperately needs.

Misleading Claims and Growing Threats

The public was told that such things could not occur. Years ago, a senior politician, advocating for the biggest and most dangerous of all investment pacts, told us: “The UK has signed trade deal after trade deal and we have never seen a issue in the past.” A consultant on this issue labelled activists of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states should be concerned by these lawsuits. Predictions that “when companies start to realise the authority they’ve been granted, they will turn their attention from the weak nations to the strong ones” were dismissed with general mockery.

That prediction has now materialised. In the current period, fossil fuel and extraction companies have filed a unprecedented number of suits against nations rich and poor, opposing – like the example of the Cumbrian coalmine – official measures to halt environmental catastrophe. Companies have so far won $114bn through ISDS, of which oil majors have obtained $84bn. That represents the combined GDP