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Can you reckon our democratic process functions? Perhaps something like this. We elect MPs. They debate and pass bills. Should a majority is obtained, the bills pass into law. Statutes is upheld by the courts. Simple as that. Yet, that used to be how it operated in the past. Not anymore.

The Advent of Secret Courts

Today, foreign corporations, or the billionaires who own them, have the power to sue elected administrations for the policies they pass, at secret arbitration panels composed of corporate lawyers. The cases take place away from public scrutiny. In contrast to domestic courts, these panels allow no opportunity to appeal or oversight by judges. You or I are barred from bringing a case to them, just as our government, or even enterprises headquartered in this country. They are open solely for corporations based overseas.

If a tribunal determines that a legislative action may compromise the corporation’s expected profits, it has the power to grant financial penalties of hundreds of millions, potentially billions.

This compensation constitute not tangible damages but money the tribunal officials conclude the company might otherwise have made. The administration might be compelled to rescind the measure. It is hesitant to introducing similar legislation of a similar nature, due to the risk of incurring a lawsuit.

A Process Running Rampant

Historically high figures of disputes are being brought, as companies take cues from each other, and private equity fund legal actions in return for a share of the takings. The outcome? National sovereignty and democracy are now prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it can trump a country's own laws and the decisions made by elected bodies is that this provision has been incorporated – without public consent, and often in a climate of total confidentiality – into bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

Twelve months ago, a conservation group achieved a major legal triumph at the High Court. The justice determined that proposals to excavate the first deep coalmine in the UK for a generation, in northwest England, were unlawfully approved by the previous government, which had agreed to the extraordinary assertion that the mine would have had no consequence on our carbon budgets. The new government subsequently revoked the licence the former government had approved. Today, this legal outcome could be compromised by an foreign court accountable to only the entities petitioning it.

In August, a firm whose ultimate owners are located in the Cayman Islands filed a lawsuit challenging the UK government. Recently a dispute settlement body in the US capital was convened to consider the case.

The company is suing the UK for the money it could have earned if the mine had received permission to go ahead. We have no clear indication how much this sum represents. What legal team is representing it against the state? A member of parliament, and ex-law officer in the previous government, that great patriot Geoffrey Cox. The state makes a decision, the domestic court supports it, then a international entity contests it through an secretive offshore tribunal, and a elected official represents its behalf.

A Sanctions Lawsuit

On the same day that the court on the coal mine dispute was convened, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. The public knows nothing of the case at present, but it appears probable that he may employ the arbitration process to challenge the restrictions the UK enacted against him following the war in Ukraine. He has already initiated proceedings against a small nation with similar intent, seeking $16bn: half that state's yearly budget. Included in the counsel acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

International law scholars argue that the EU’s delay in utilising seized Russian assets as security for its financial support package is due to Belgium’s fear that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over elected governments could be blocking the money Ukraine urgently requires.

Misleading Claims and Escalating Costs

The public was told that these scenarios wouldn’t happen. In 2014, a government leader, advocating for the biggest and most dangerous of all investment pacts, declared: “We’ve signed investment treaty upon trade deal and there has never been a problem in the past.” An expert on this matter described critics of “scaremongering … the truth is, ISDS has little impact on the UK much”. The overall message seemed to be that exclusively weaker states had to worry about such legal actions. Predictions that “as corporations begin to understand the authority bestowed upon them, they will redirect their efforts from the poorer states to the strong ones” were met with general mockery.

That threat is now a reality. This year, oil and gas and extraction companies have filed a record number of cases against nations both wealthy and developing, challenging – as in the case of the UK mine – government attempts to prevent climate breakdown. Firms have to date won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That is equivalent to the combined GDP