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Can you understand our democratic process works? Perhaps along the lines of this. We elect MPs. They legislate on bills. When a majority is secured, the bills become law. The law is upheld by the courts. Simple as that. Well, that’s how it used to work. No longer.

The Advent of Secret Courts

Today, foreign corporations, and the oligarchs who own them, are able to litigate against nation states for the laws they pass, at offshore tribunals staffed by business advocates. The cases take place behind closed doors. In contrast to domestic courts, these panels provide no avenue for appeal or oversight by judges. You or I are barred from bringing a case to them, and neither can our government, or even businesses based in this country. Access is granted solely for businesses operating from foreign soil.

When a secret court finds that a government measure might diminish the corporation’s expected profits, it may order damages of vast sums, running into billions.

These awards constitute not actual losses but money the panel members decide the company would perhaps have made. The state may have to abandon its policy. It will be hesitant to passing future laws of a similar nature, for fear of facing litigation.

A Process Spiralling Out of Control

Unprecedented levels of legal actions are being filed, as companies take cues from each other, and hedge funds bankroll lawsuits in exchange for a portion of the awards. The consequence? National sovereignty and democratic governance are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can override a country's own laws and the choices enacted by elected bodies is that this provision has been incorporated – without democratic mandate, and often in a climate of total confidentiality – within bilateral investment treaties.

A Specific Case: The Whitehaven Coal Mine

Twelve months ago, activists achieved a major legal triumph at the High Court. The justice determined that schemes to open the first deep coalmine in the UK for 30 years, in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have had no consequence on national carbon targets. The incoming administration later cancelled the licence the previous administration had issued. Today, this legal outcome could be compromised by an secret arbitration panel reporting to exclusively the entities bringing the case.

In August, a company whose ultimate owners are based in the offshore financial centre lodged a claim challenging the UK government. The previous week a dispute settlement body in the United States was convened to consider the case.

The claimant is litigating against the UK for the money it would have generated if the mine had received permission to proceed. We have no idea how much this could amount to. Who is representing it in opposition to the state? A sitting MP, and ex-law officer in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The state passes a law, the high court validates it, then a foreign company contests it through an secretive private court, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

On the same day that the tribunal on the coalmine case was established, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, an oligarch. We know little of the case to date, but it is highly possible that he may employ the tribunal to fight the restrictions the UK levied against him subsequent to the Russian aggression. He has previously filed a claim against Luxembourg on these grounds, demanding sixteen billion dollars: half that government’s annual revenue. Part of the counsel representing him there? the wife of a former prime minister, wife of the former British prime minister.

Trade specialists contend that the EU’s delay in using frozen Russian assets as security for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a investment pact. This extraordinary, secretive influence over elected governments could be blocking the money Ukraine urgently requires.

Empty Promises and Escalating Threats

The public was told that such things could not occur. In 2014, a government leader, advocating for the biggest and most dangerous of all such treaties, stated: “The UK has signed trade deal upon trade deal and there has not been a issue in the past.” An expert on this matter accused campaigners of “scaremongering … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about these lawsuits. Warnings that “once firms begin to understand the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the strong ones” were greeted by scepticism.

That threat has now materialised. Recently, fossil fuel and mining firms have filed a historic level of claims against nations rich and poor, contesting – like the example of the UK mine – state efforts to stop global warming. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have obtained $84bn. That is equivalent to the combined GDP