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What is your reckon our democratic process operates? It could be along the lines of this. The public votes for MPs. They vote on bills. If a majority is achieved, the bills are enacted as law. The law are enforced by the courts. Simple as that. Yet, that used to be how it once functioned. No longer.

The Rise of Secret Courts

In the modern era, international firms, along with the oligarchs who own them, are able to litigate against nation states for the regulations they pass, at offshore tribunals made up of commercial attorneys. These proceedings are conducted away from public scrutiny. In contrast to domestic courts, these panels allow no opportunity to appeal or legal review. You or I cannot take a case to them, just as our government, or even businesses headquartered in this country. The door is open exclusively to businesses based overseas.

If a tribunal determines that a legislative action could harm the corporation’s anticipated profits, it can award financial penalties of vast sums, running into billions.

This compensation are based not on actual losses but compensation the arbitrators conclude the company might otherwise have made. The administration may have to drop the legislation. It becomes discouraged from enacting future policies of a similar nature, worried about facing litigation.

A Process Running Rampant

Historically high figures of disputes are being filed, as companies take cues from each other, and investment funds bankroll lawsuits for a share of a share of the settlements. The result? Democratic sovereignty and democracy are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the choices taken by elected bodies is that this clause has been incorporated – without public consent, and often in an atmosphere of extreme secrecy – inside trade treaties.

A Specific Case: The UK Coal Mine

Twelve months ago, a conservation group won a great victory at the senior court. The judge ruled that schemes to excavate the first major coal mine in the UK for three decades, in Cumbria, were found to be unlawfully approved by the outgoing administration, which had agreed to the bizarre claim that the mine would have had no impact on our carbon budgets. The incoming administration subsequently revoked the licence the Tories had granted. Currently, this victory faces being overturned by an secret arbitration panel answering to only the corporations filing the suit.

Last August, a company whose final controllers are located in the Cayman Islands filed a lawsuit against the UK government. The previous week a arbitration panel in the United States was established to hear it.

This firm is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to proceed. Citizens have no idea how much this could amount to. Which individual is serving as its counsel in opposition to the state? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The government passes a law, the domestic court upholds it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a elected official represents its behalf.

The Russian Case

On the same day that the panel on the coalmine case was appointed, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. We know little of the case so far, but it is highly possible that he’ll use the arbitration process to fight the penalties the UK imposed on him after the Russian aggression. He has previously initiated proceedings against another European state on these grounds, claiming sixteen billion dollars: half that nation's yearly income. Among the lawyers representing him there? Cherie Blair, wife of the former British prime minister.

Trade specialists argue that the EU’s hesitation in utilising seized Russian assets as security for its aid for Ukraine is due to concerns within Belgium that it could be sued in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over elected governments may be obstructing the money Ukraine desperately needs.

Misleading Claims and Mounting Risks

The public was told that such things wouldn’t happen. In 2014, a government leader, advocating for the most significant and hazardous of all such treaties, declared: “Britain has agreed to trade agreement after trade deal and there has not been a issue in the past.” A consultant on this issue accused activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The overall message was crafted to be that only poorer nations should be concerned by such legal actions. Cautionary notes that “as corporations grasp the power they’ve been granted, they will shift their focus from the vulnerable countries to the developed economies” were met with widespread derision.

That prediction has now materialised. In the current period, fossil fuel and mining firms have lodged a record number of claims against nations rich and poor, challenging – like the example of the UK mine – official measures to prevent environmental catastrophe. Firms have so far won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP