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Can you understand our democratic process operates? It could be along the lines of this. We elect MPs. They vote on bills. When a majority is achieved, the bills become law. Statutes are enforced by the courts. Simple as that. However, that was how it once functioned. No longer.

The Rise of Secret Courts

Today, foreign corporations, and the billionaires that control them, can sue nation states for the laws they pass, at secret arbitration panels made up of business advocates. The cases are held in secret. Unlike our courts, these tribunals provide no avenue for appeal or legal review. You or I cannot take a case to them, nor can our government, or even companies based in this country. They are open solely for corporations operating from foreign soil.

When a secret court finds that a government measure might diminish the corporation’s expected profits, it has the power to grant damages of hundreds of millions of pounds, even billions.

These sums constitute not actual losses but compensation the panel members conclude the company would perhaps have made. The administration could be forced to rescind the measure. It will be deterred from enacting future policies along the same lines, due to the risk of being sued.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being brought, as companies observe each other, and investment funds finance suits for a share of a portion of the takings. The result? Sovereignty and democracy are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to trump national legislation and the rulings enacted by parliaments is that this stipulation has been inserted – without democratic mandate, and often in an atmosphere of total confidentiality – inside bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

Twelve months 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 30 years, in Cumbria, had been illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine could have zero effect on climate commitments. The new government later cancelled the permission the previous administration had approved. Currently, this victory is under threat by an offshore tribunal answering to no one but the entities filing the suit.

Last August, a firm whose final controllers reside in the tax haven initiated proceedings against the UK government. Last week a tribunal in the US capital was convened to adjudicate on it.

The claimant is litigating against the UK for the profits it might have made if the mine had been allowed to go ahead. The public has no idea how much this sum represents. Who is representing it against the British government? A sitting MP, and former attorney-general in the Conservative government, the noted patriot Sir Geoffrey Cox. The government passes a law, the high court upholds it, then a overseas corporation disputes it through an unaccountable offshore tribunal, and a elected official works for its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the coalmine case was convened, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. The public knows nothing of the case so far, but it is highly possible that he’ll use the arbitration process to challenge the sanctions the UK enacted against him following the war in Ukraine. He has previously filed a claim against Luxembourg for this reason, seeking sixteen billion dollars: an amount representing half state's yearly income. Among the counsel representing him there? a prominent lawyer, spouse of the previous PM.

Legal experts contend that the EU’s delay in using frozen state funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, undemocratic power over sovereign states may be obstructing the funds Ukraine desperately needs.

Misleading Claims and Growing Costs

We were assured that these events could not occur. In 2014, a government leader, promoting the most significant and hazardous of all such treaties, told us: “We’ve signed investment treaty upon trade deal and there has not been a case in the past.” An expert on this issue labelled critics of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by such legal actions. Predictions that “once firms grasp the power they now possess, they will turn their attention from the weak nations to the wealthy nations” were greeted by general mockery.

That threat has now materialised. In the current period, oil and gas and extraction companies have initiated a unprecedented number of suits against nations across the economic spectrum, contesting – as in the case of the UK mine – state efforts to stop climate breakdown. Firms have so far won one hundred and fourteen billion dollars via ISDS, of which oil majors have obtained the majority. That is equivalent to the combined GDP