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What is your perceive our democratic process works? Perhaps similar to this. We elect MPs. They debate and pass bills. When a majority is obtained, the bills pass into law. Legislation are enforced by the courts. End of story. Yet, that’s how it once functioned. Not anymore.

The Emergence of Shadow Courts

Today, foreign corporations, and the billionaires that control them, can sue nation states for the regulations they pass, at secret arbitration panels composed of commercial attorneys. These proceedings are held away from public scrutiny. Unlike our courts, these panels grant no right of appeal or judicial review. The general public cannot take a case to them, just as our government, including businesses operating from this country. Access is granted only to corporations operating from foreign soil.

If a tribunal rules that a government measure might diminish the corporation’s anticipated profits, it may order compensation of vast sums, even billions.

These awards are based not on tangible damages but compensation the panel members conclude the company would perhaps have made. The government might be compelled to abandon its policy. It becomes deterred from passing future laws of a similar nature, worried about facing litigation.

A Mechanism Growing Exponentially

Historically high figures of cases are being filed, as firms observe each other, and private equity fund legal actions for a share of a share of the awards. The outcome? Sovereignty and democratic governance are turning into prohibitively expensive.

This mechanism is called “investor-state dispute settlement” (ISDS). The reason it is allowed to trump national legislation and the choices taken by elected bodies is that this clause has been inserted – without democratic mandate, and often in an atmosphere of total confidentiality – into international trade agreements.

A Concrete Instance: The Cumbrian Coalmine

Last year, environmental campaigners secured a significant win at the High Court. The presiding officer found that plans to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine would have zero effect on national carbon targets. The Labour government then withdrew the permission the previous administration had approved. Today, this victory faces being overturned by an offshore tribunal reporting to exclusively the companies bringing the case.

During August, a company whose beneficial owners are located in the offshore financial centre lodged a claim against the UK government. The previous week a arbitration panel in Washington DC was set up to consider the case.

The company is suing the UK for the revenue it might have made if the mine had been permitted to commence operations. Citizens have little idea how much this sum represents. What legal team is representing it against the state? A sitting MP, and ex-law officer in the previous government, the noted patriot Sir Geoffrey Cox. The government makes a decision, the domestic court supports it, then a overseas corporation challenges it through an undemocratic private court, and a elected official acts on its behalf.

A Sanctions Case

Simultaneously that the tribunal on the mining lawsuit was convened, we learned from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it seems likely that he may employ the arbitration process to contest the penalties the UK imposed on him following the Russian aggression. He has already filed a claim against Luxembourg on these grounds, claiming sixteen billion dollars: equivalent to half of government’s yearly income. Part of the legal team acting for him in that case? Cherie Blair, married to the former British prime minister.

Legal experts contend that the EU’s procrastination in utilising seized Russian assets as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments might be preventing the funds Ukraine critically depends on.

Empty Promises and Mounting Costs

The public was told that such things wouldn’t happen. Previously, a senior politician, championing the most significant and hazardous of all such treaties, stated: “We’ve signed trade agreement upon trade deal and there has not been a problem in the past.” An adviser on this matter described activists of “exaggeration … the truth is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries needed to fear ISDS claims. Warnings that “when companies begin to understand the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the developed economies” were met with widespread derision.

That threat has now materialised. In the current period, oil and gas and mining firms have filed a historic level of suits against nations both wealthy and developing, opposing – similar to the UK mine – state efforts to halt global warming. Corporations have so far won vast sums through ISDS, of which energy giants have secured eighty-four billion dollars. That equates to the combined GDP