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Can you reckon our democratic process operates? It could be similar to this. We elect MPs. They debate and pass bills. When a majority is secured, the bills are enacted as law. Statutes are enforced by the courts. End of story. Yet, that used to be how it used to work. Not anymore.

The Emergence of Secret Courts

Today, overseas companies, or the billionaires that control them, can sue elected administrations for the laws they pass, at offshore tribunals composed of commercial attorneys. These proceedings are conducted in secret. In contrast to domestic courts, these tribunals provide no avenue for appeal or legal review. The general public cannot take a case to them, just as our government, or even companies operating from this country. The door is open solely for businesses operating from foreign soil.

Should an arbitration panel finds that a legislative action might diminish the corporation’s expected profits, it may order damages of hundreds of millions, even billions.

This compensation represent not real financial harm but compensation the tribunal officials decide the company would perhaps have made. The state may have to abandon its policy. It will be hesitant to passing future laws of a similar nature, worried about facing litigation.

A Process Growing Exponentially

Record numbers of disputes are being filed, as corporations learn from each other, and private equity bankroll lawsuits in exchange for a share of the awards. The result? Sovereignty and democracy are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the rulings enacted by parliaments is that this stipulation has been incorporated – absent public approval, and frequently under a climate of extreme secrecy – inside international trade agreements.

A Concrete Case: The Cumbrian Coalmine

Last year, a conservation group secured a significant win at the High Court. The justice ruled that proposals to excavate the first new deep coal mine in the UK for 30 years, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had endorsed the questionable argument that the mine would have no consequence on climate commitments. The incoming administration then withdrew the consent the previous administration had granted. Currently, this success faces being overturned by an secret arbitration panel accountable to no one but the companies petitioning it.

In August, a firm whose ultimate owners are based in the tax haven initiated proceedings challenging the UK government. The previous week a tribunal in Washington DC was set up to hear it.

This firm is seeking compensation from the UK for the profits it could have earned if the mine had received permission to go ahead. We have no clear indication how much this sum represents. Who is serving as its counsel challenging the state? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The government passes a law, the national judiciary supports it, then a overseas corporation contests it through an secretive private court, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coal mine dispute was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case to date, but it appears probable that he’ll use the arbitration process to fight the restrictions the UK imposed on him after the Russian aggression. He has previously initiated proceedings against Luxembourg with similar intent, demanding sixteen billion dollars: half that government’s yearly income. Included in the lawyers representing him there? the wife of a former prime minister, married to the former British prime minister.

Trade specialists believe that the EU’s delay in using frozen Russian assets as guarantee for its aid for Ukraine stems from Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This extraordinary, unaccountable authority over sovereign states may be obstructing the money Ukraine critically depends on.

False Assurances and Mounting Costs

The public was told that such things could not occur. In 2014, a senior politician, promoting the largest and riskiest of all such treaties, stated: “The UK has signed trade deal upon trade deal and there has never been a issue in the past.” A consultant on this matter described critics of “alarmism … the truth is, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries should be concerned by ISDS claims. Predictions that “once firms start to realise the power they’ve been granted, they will turn their attention from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has come to pass. This year, fossil fuel and resource corporations have initiated a unprecedented number of claims against nations both wealthy and developing, challenging – similar to the UK mine – state efforts to prevent climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have been awarded $84bn. That represents the combined GDP