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What is your understand our democratic process functions? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is secured, the bills become law. Legislation is upheld by the courts. That's it. However, that was how it operated in the past. No longer.

The Rise of Secret Courts

Today, foreign corporations, and the wealthy individuals who own them, are able to litigate against governments for the regulations they pass, at private courts composed of corporate lawyers. Such disputes are conducted in secret. Differing from national judiciaries, these panels grant no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. The door is open exclusively to entities operating from foreign soil.

If a tribunal finds that a law or policy may compromise the corporation’s projected profits, it can award financial penalties of hundreds of millions of pounds, running into billions.

These sums represent not real financial harm but money the tribunal officials decide the company would perhaps have made. The government might be compelled to drop the legislation. It will be deterred from passing future laws in that area, due to the risk of facing litigation.

A Mechanism Growing Exponentially

Record numbers of legal actions are being brought, as corporations learn from each other, and private equity bankroll lawsuits in exchange for a portion of the settlements. The outcome? Sovereignty and popular rule are turning into prohibitively expensive.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to override domestic law and the rulings enacted by elected bodies is that this clause has been incorporated – without democratic mandate, and often in conditions of extreme secrecy – within bilateral investment treaties.

A Real-World Case: The Whitehaven Coalmine

Last year, a conservation group achieved a major legal triumph at the senior court. The judge ruled that plans to open the first major coal mine in the UK for three decades, in Cumbria, were found to be wrongly permitted by the Conservative government, which had agreed to the bizarre claim that the mine would have had no impact on our carbon budgets. The new government later cancelled the consent the Tories had approved. Now, this legal outcome is under threat by an offshore tribunal accountable to exclusively the companies filing the suit.

Last August, a corporate entity whose final controllers are located in the tax haven initiated proceedings versus the UK government. Last week a dispute settlement body in Washington DC was convened to hear it.

The claimant is suing the UK for the revenue it might have made if the mine had received permission to commence operations. We have little idea how much this could amount to. Which individual is representing it challenging the state? A member of parliament, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The government makes a decision, the domestic court validates it, then a overseas corporation challenges it through an secretive private court, and a member of our parliament acts on its behalf.

The Russian Challenge

On the same day that the court on the coalmine case was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are scarce of the case so far, but it appears probable that he will utilise the ISDS mechanism to contest the sanctions the UK imposed on him following the Russian aggression. He has initiated proceedings against another European state with similar intent, seeking a colossal sum: an amount representing half nation's annual revenue. Among the legal team on his side? Cherie Blair, wife of the previous PM.

Trade specialists argue that the EU’s hesitation in using frozen Russian assets as guarantee for its aid for Ukraine is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a investment pact. This unprecedented, secretive influence over elected governments may be obstructing the funds Ukraine desperately needs.

Misleading Claims and Mounting Costs

We were assured that such things wouldn’t happen. In 2014, a government leader, promoting the biggest and most dangerous of all these agreements, stated: “We’ve signed investment treaty after trade deal and there has not been a case in the past.” A consultant on this issue labelled activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression appeared to be that only poorer nations had to worry about ISDS claims. Predictions that “as corporations start to realise the power bestowed upon them, they will shift their focus from the vulnerable countries to the developed economies” were greeted by widespread derision.

That prediction is now a reality. In the current period, oil and gas and mining firms have lodged a unprecedented number of suits against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – government attempts to prevent climate breakdown. Firms have to date won vast sums via ISDS, of which fossil fuel companies have secured $84bn. That represents the combined GDP