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How do you perceive our democratic process works? It could be similar to this. The public votes for MPs. They legislate on bills. If a majority is achieved, the bills pass into law. The law is upheld by the courts. End of story. However, that was how it once functioned. Not anymore.

The Rise of Secret Tribunals

In the modern era, international firms, along with the billionaires behind them, are able to litigate against elected administrations for the laws they pass, at secret arbitration panels composed of corporate lawyers. Such disputes are held behind closed doors. Differing from national judiciaries, these panels grant no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even companies based in this country. The door is open solely for businesses based overseas.

If a tribunal determines that a government measure could harm the corporation’s anticipated profits, it may order compensation of vast sums, running into billions.

These sums constitute not real financial harm but money the arbitrators determine the company might otherwise have made. The state could be forced to rescind the measure. It becomes hesitant to passing future laws of a similar nature, worried about facing litigation.

A Mechanism Spiralling Out of Control

Unprecedented levels of legal actions are being brought, as companies observe each other, and investment funds fund legal actions for a share of a cut of the takings. The result? National sovereignty and popular rule are now unaffordable.

This mechanism is called “investor-state dispute settlement” (ISDS). The rationale it can trump a country's own laws and the choices made by elected bodies is that this stipulation has been incorporated – absent public approval, and frequently under conditions of total confidentiality – into trade treaties.

A Specific Case: The UK Coalmine

Twelve months ago, a conservation group secured a significant win at the High Court. The presiding officer ruled that plans to excavate the first deep coalmine in the UK for 30 years, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have had zero effect on national carbon targets. The new government then withdrew the licence the former government had issued. Now, this victory could be compromised by an secret arbitration panel accountable to no one but the corporations filing the suit.

During August, a firm whose final controllers are based in the Cayman Islands filed a lawsuit versus the UK government. Recently a arbitration panel in the United States was set up to hear it.

This firm is litigating against the UK for the profits it might have made if the mine had been permitted to proceed. Citizens have little idea how much this could amount to. Who is acting on its behalf in opposition to the state? A member of parliament, and previous senior legal advisor in the previous government, that great patriot Sir Geoffrey Cox. The administration passes a law, the high court upholds it, then a overseas corporation disputes it through an secretive offshore tribunal, and a elected official represents its behalf.

An Oligarch's Case

On the same day that the tribunal on the coalmine case was appointed, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it appears probable that he will utilise the arbitration process to fight the sanctions the UK imposed on him following the Russian aggression. He has already started suing a small nation for this reason, demanding sixteen billion dollars: half that state's annual revenue. Part of the lawyers representing him there? the wife of a former prime minister, wife of the previous PM.

Trade specialists argue that the EU’s delay in utilising seized state funds as security for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, undemocratic power over elected governments could be blocking the funds Ukraine urgently requires.

False Assurances and Mounting Risks

Politicians promised that such things could not occur. In 2014, a senior politician, advocating for the most significant and hazardous of all such treaties, told us: “The UK has signed trade deal after trade deal and we have never seen a problem in the past.” A consultant on this matter accused critics of “scaremongering … in reality, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries had to worry about such legal actions. Predictions that “when companies grasp the influence they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were dismissed with widespread derision.

That warning has come to pass. Recently, fossil fuel and mining firms have initiated a historic level of claims against nations rich and poor, challenging – similar to the Whitehaven project – official measures to halt environmental catastrophe. Companies have thus far won vast sums through ISDS, of which energy giants have obtained $84bn. That represents the combined GDP