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How do you perceive our democratic process operates? It could be similar to this. The public votes for MPs. They vote on bills. If a majority is obtained, the bills become law. The law is maintained by the courts. Simple as that. Well, that used to be how it operated in the past. No longer.

The Emergence of Shadow Arbitration Panels

In the modern era, foreign corporations, along with the billionaires behind them, are able to litigate against elected administrations for the regulations they pass, at private courts staffed by commercial attorneys. Such disputes take place away from public scrutiny. Unlike our courts, these bodies grant no right of appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even companies operating from this country. The door is open exclusively to corporations registered abroad.

When a secret court rules that a law or policy could harm the corporation’s expected profits, it may order compensation of hundreds of millions, even billions.

These awards are based not on actual losses but funds the panel members conclude the company might otherwise have made. The state could be forced to abandon its policy. It becomes discouraged from enacting future policies in that area, due to the risk of being sued.

A System Growing Exponentially

Historically high figures of disputes are being initiated, as corporations observe each other, and private equity bankroll lawsuits for a share of a cut of the settlements. The result? Sovereignty and popular rule are now unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is permitted to supersede a country's own laws and the choices made by elected bodies is that this provision has been written – without public consent, and frequently under a climate of total confidentiality – inside international trade agreements.

A Concrete Instance: The UK Coal Mine

A year ago, activists achieved a major legal triumph at the high court. The presiding officer determined that schemes to excavate the first deep coalmine in the UK for 30 years, in Cumbria, were unlawfully approved by the outgoing administration, which had agreed to the bizarre claim that the mine would have no consequence on our carbon budgets. The Labour government later cancelled the licence the previous administration had granted. Now, this success faces being overturned by an offshore tribunal answering to no one but the companies petitioning it.

Last August, a corporate entity whose beneficial owners are based in the tax haven filed a lawsuit versus the UK government. Recently a tribunal in the US capital was set up to hear it.

The claimant is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to proceed. Citizens have little idea how much this could amount to. Who is representing it in opposition to the state? An elected representative, and previous senior legal advisor in the previous government, that great patriot Geoffrey Cox. The government passes a law, the high court supports it, then a overseas corporation contests it through an secretive arbitration panel, and a elected official works for its behalf.

A Sanctions Case

Simultaneously that the tribunal on the mining lawsuit was established, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. We know scarce of the case at present, but it is highly possible that he may employ the arbitration process to challenge the restrictions the UK levied against him after the war in Ukraine. He has initiated proceedings against a small nation on these grounds, seeking $16bn: half that state's yearly budget. Included in the counsel representing him there? Cherie Blair, spouse of the ex-UK leader.

Legal experts contend that the EU’s delay in utilising seized oligarchs' funds as guarantee for its loan to Ukraine is due to apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over democratic administrations may be obstructing the funds Ukraine critically depends on.

False Assurances and Growing Costs

We were assured that such things were not possible. Previously, a senior politician, championing the largest and riskiest of all such treaties, declared: “The UK has signed trade deal upon trade deal and we have never seen a case in the past.” A consultant on this issue accused campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries should be concerned by such legal actions. Predictions that “when companies start to realise the power they now possess, they will redirect their efforts from the poorer states to the strong ones” were greeted by general mockery.

That prediction has now materialised. Recently, fossil fuel and mining firms have lodged a record number of suits against nations across the economic spectrum, opposing – as in the case of the UK mine – government attempts to halt climate breakdown. Firms have thus far won vast sums via ISDS, of which fossil fuel companies have been awarded the majority. That is equivalent to the combined GDP