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What is your perceive our democratic process works? Maybe along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is obtained, the bills become law. Statutes is maintained by the courts. That's it. Yet, that was how it operated in the past. No longer.

The Advent of Shadow Tribunals

Today, overseas companies, along with the wealthy individuals behind them, have the power to sue governments for the policies they pass, at private courts composed of corporate lawyers. The cases are held in secret. In contrast to domestic courts, these tribunals allow no right of appeal or judicial review. You or I are unable to file a case to them, and neither can our government, including companies operating from this country. The door is open exclusively to corporations operating from foreign soil.

When a secret court finds that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions, potentially billions.

This compensation constitute not real financial harm but compensation the tribunal officials determine the company might otherwise have made. The administration might be compelled to abandon its policy. It is deterred from introducing similar legislation in that area, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Record numbers of legal actions are being brought, as companies take cues from each other, and hedge funds finance suits for a share of a share of the takings. The outcome? Sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to supersede a country's own laws and the decisions taken by elected bodies is that this clause has been written – without democratic mandate, and frequently under a climate of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Whitehaven Coal Mine

Twelve months ago, a conservation group secured a significant win at the senior court. The judge ruled that schemes to open the first new deep coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine would have no consequence on national carbon targets. The incoming administration subsequently revoked the consent the previous administration had issued. Today, this legal outcome is under threat by an offshore tribunal accountable to no one but the entities filing the suit.

During August, a firm whose final controllers are based in the tax haven initiated proceedings challenging the UK government. Last week a arbitration panel in Washington DC was set up to consider the case.

The claimant is litigating against the UK for the profits it might have made if the mine had been permitted to go ahead. The public has no idea how much this might be. Who is representing it in opposition to the state? A sitting MP, and former attorney-general in the Conservative government, the noted patriot the MP. The administration makes a decision, the high court validates it, then a foreign company contests it through an unaccountable arbitration panel, and a sitting MP works for its behalf.

An Oligarch's Case

Simultaneously that the panel on the mining lawsuit was convened, we learned from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. We know nothing of the case so far, but it is highly possible that he will utilise the arbitration process to fight the restrictions the UK enacted against him following the war in Ukraine. He has already started suing Luxembourg on these grounds, seeking sixteen billion dollars: an amount representing half nation's yearly budget. Included in the legal team on his side? the wife of a former prime minister, wife of the former British prime minister.

International law scholars contend that the EU’s procrastination in leveraging immobilised state funds as guarantee for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a trade agreement. This unprecedented, unaccountable authority over elected governments might be preventing the funds Ukraine critically depends on.

Empty Promises and Growing Threats

The public was told that these scenarios could not occur. Years ago, a former prime minister, advocating for the most significant and hazardous of all these agreements, stated: “Britain has agreed to investment treaty after trade deal and there has never been a issue in the past.” An expert on this issue labelled campaigners of “alarmism … in reality, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear ISDS claims. Predictions that “once firms grasp the influence they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with general mockery.

That prediction has now materialised. In the current period, fossil fuel and mining firms have filed a record number of cases against nations across the economic spectrum, challenging – as in the case of the UK mine – official measures to halt climate breakdown. Corporations have so far won vast sums via ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP