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What is your reckon our democratic process operates? Maybe something like this. We elect MPs. They vote on bills. When a majority is secured, the bills become law. Statutes is upheld by the courts. That's it. However, that was how it operated in the past. Those days are over.

The Emergence of Offshore Arbitration Panels

Nowadays, international firms, and the billionaires that control them, are able to litigate against elected administrations for the regulations they pass, at private courts made up of commercial attorneys. These proceedings are held in secret. Differing from national judiciaries, these bodies provide no avenue for appeal or judicial review. Ordinary citizens cannot take a case to them, nor can our government, including businesses headquartered in this country. Access is granted exclusively to businesses based overseas.

Should an arbitration panel finds that a law or policy might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions, even billions.

This compensation are based not on real financial harm but money the arbitrators determine the company could potentially have made. The administration could be forced to rescind the measure. It will be hesitant to enacting future policies along the same lines, worried about being sued.

A System Running Rampant

Unprecedented levels of cases are being filed, as corporations learn from each other, and private equity bankroll lawsuits for a share of a cut of the awards. The consequence? Democratic sovereignty and popular rule are becoming too costly.

The process is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the rulings enacted by parliaments is that this stipulation has been inserted – absent public approval, and frequently under a climate of total confidentiality – within international trade agreements.

A Specific Instance: The Cumbrian Coal Mine

A year ago, a conservation group achieved a major legal triumph at the High Court. The judge found that plans to excavate the first deep coalmine in the UK for 30 years, in northwest England, were unlawfully approved by the outgoing administration, which had agreed to the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration then withdrew the consent the previous administration had granted. Today, this legal outcome is under threat by an foreign court answering to no one but the companies petitioning it.

Last August, a firm whose beneficial owners are based in the tax haven lodged a claim challenging the UK government. The previous week a dispute settlement body in the US capital was established to hear it.

This firm is litigating against the UK for the money it might have made if the mine had received permission to commence operations. Citizens have no clear indication how much this might be. Which individual is serving as its counsel challenging the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The state enacts a policy, the domestic court supports it, then a foreign company disputes it through an undemocratic arbitration panel, and a elected official represents its behalf.

The Russian Case

Simultaneously that the court on the coal mine dispute was established, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. The public knows scarce of the case at present, but it appears probable that he may employ the ISDS mechanism to challenge the penalties the UK imposed on him following the Russian aggression. He has started suing a small nation with similar intent, seeking a colossal sum: an amount representing half nation's yearly income. Part of the counsel acting for him in that case? the wife of a former prime minister, spouse of the ex-UK leader.

Legal experts argue that the EU’s procrastination in using frozen state funds as security for its loan to Ukraine arises from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, unaccountable authority over sovereign states could be blocking the finance Ukraine critically depends on.

False Assurances and Escalating Risks

Politicians promised that these scenarios wouldn’t happen. Years ago, a senior politician, promoting the largest and riskiest of all such treaties, declared: “We’ve signed investment treaty upon trade deal and there has not been a issue in the past.” An expert on this topic accused activists of “exaggeration … in reality, ISDS barely touches the UK much”. The prevailing narrative appeared to be that solely developing countries should be concerned by these lawsuits. Predictions that “once firms begin to understand the power bestowed upon them, they will shift their focus from the weak nations to the strong ones” were greeted by general mockery.

That threat is now a reality. Recently, oil and gas and mining firms have initiated a historic level of cases against nations both wealthy and developing, contesting – as in the case of the Whitehaven project – official measures to stop climate breakdown. Firms have thus far won vast sums through ISDS, of which oil majors have obtained $84bn. That equates to the combined GDP