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What is your understand our democratic process functions? Maybe something like this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. The law is maintained by the courts. That's it. However, that’s how it used to work. Those days are over.

The Advent of Secret Courts

In the modern era, overseas companies, and the billionaires that control them, can sue nation states for the policies they pass, at private courts composed of business advocates. The cases are conducted away from public scrutiny. Differing from national judiciaries, these bodies allow no opportunity to appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, including companies headquartered in this country. They are open only to entities based overseas.

When a secret court determines that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of vast sums, even billions.

These sums represent not actual losses but funds the panel members decide the company could potentially have made. The administration might be compelled to abandon its policy. It becomes deterred from introducing similar legislation in that area, due to the risk of facing litigation.

A System Spiralling Out of Control

Historically high figures of cases are being brought, as firms observe each other, and private equity bankroll lawsuits for a share of a cut of the settlements. The outcome? National sovereignty and democracy are now too costly.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede a country's own laws and the decisions made by parliaments is that this provision has been incorporated – without public consent, and frequently under an atmosphere of profound opacity – into trade treaties.

A Real-World Case: The Whitehaven Coalmine

Last year, activists won a great victory at the High Court. The presiding officer ruled that proposals to dig the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be wrongly permitted by the outgoing administration, which had accepted the extraordinary assertion that the mine would have zero effect on our carbon budgets. The Labour government subsequently revoked the consent the Tories had issued. Today, this legal outcome could be compromised by an secret arbitration panel answering to no one but the corporations petitioning it.

During August, a firm whose beneficial owners are based in the offshore financial centre initiated proceedings against the UK government. Last week a arbitration panel in the United States was established to adjudicate on it.

The company is litigating against the UK for the profits it could have earned if the mine had been permitted to proceed. Citizens have little idea how much this might be. Which individual is representing it in opposition to the British government? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot the MP. The government makes a decision, the domestic court validates it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a sitting MP represents its behalf.

An Oligarch's Case

Concurrently that the tribunal on the coalmine case was appointed, information emerged from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. We know nothing of the case to date, but it seems likely that he’ll use the ISDS mechanism to challenge the sanctions the UK levied against him following the Russian aggression. He has already initiated proceedings against a small nation with similar intent, demanding $16bn: an amount representing half government’s yearly income. Included in the lawyers on his side? Cherie Blair, married to the previous PM.

Trade specialists believe that the EU’s hesitation in utilising seized state funds as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over elected governments could be blocking the funds Ukraine urgently requires.

Misleading Claims and Mounting Costs

The public was told that these scenarios were not possible. In 2014, a senior politician, advocating for the most significant and hazardous of all such treaties, stated: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” A consultant on this matter accused critics of “scaremongering … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that only poorer nations should be concerned by these lawsuits. Warnings that “when companies begin to understand the influence bestowed upon them, they will shift their focus from the vulnerable countries to the wealthy nations” were greeted by scepticism.

That threat has now materialised. In the current period, oil and gas and extraction companies have filed a record number of cases against nations across the economic spectrum, opposing – like the example of the Whitehaven project – state efforts to stop environmental catastrophe. Firms have so far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP