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How do you understand our democratic process works? Maybe along the lines of this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills pass into law. The law is upheld by the courts. That's it. However, that was how it used to work. No longer.

The Advent of Secret Courts

Nowadays, foreign corporations, and the billionaires that control them, can sue governments for the laws they pass, at private courts made up of corporate lawyers. The cases are held in secret. Differing from national judiciaries, these panels grant no avenue for appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, including enterprises headquartered in this country. The door is open exclusively to businesses registered abroad.

Should an arbitration panel determines that a law or policy may compromise the corporation’s expected profits, it may order financial penalties of hundreds of millions, potentially billions.

These awards are based not on actual losses but compensation the tribunal officials determine the company might otherwise have made. The administration might be compelled to abandon its policy. It is discouraged from passing future laws in that area, for fear of facing litigation.

A Mechanism Spiralling Out of Control

Historically high figures of cases are being filed, as firms take cues from each other, and private equity fund legal actions for a share of a cut of the awards. The outcome? National sovereignty and democratic governance are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override domestic law and the decisions made by legislatures is that this clause has been incorporated – without democratic mandate, and typically amid conditions of total confidentiality – into trade treaties.

A Real-World Instance: The UK Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the senior court. The judge ruled that schemes to open the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had agreed to the extraordinary assertion that the mine could have no consequence on our carbon budgets. The new government later cancelled the consent the former government had approved. Currently, this victory faces being overturned by an secret arbitration panel accountable to no one but the corporations petitioning it.

Last August, a firm whose beneficial owners are based in the offshore financial centre filed a lawsuit challenging the UK government. Last week a dispute settlement body in Washington DC was convened to consider the case.

The company is litigating against the UK for the revenue it might have made if the mine had received permission to commence operations. Citizens have little idea how much this might be. What legal team is acting on its behalf against the state? A sitting MP, and former attorney-general in the outgoing administration, the self-proclaimed patriot Geoffrey Cox. The administration enacts a policy, the national judiciary supports it, then a international entity contests it through an secretive arbitration panel, and a elected official works for its behalf.

The Russian Challenge

Simultaneously that the court on the coal mine dispute was convened, we learned from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are nothing of the case so far, but it is highly possible that he may employ the ISDS mechanism to contest the restrictions the UK enacted against him after the war in Ukraine. He has previously started suing another European state for this reason, demanding $16bn: an amount representing half state's annual revenue. Part of the counsel acting for him in that case? Cherie Blair, wife of the ex-UK leader.

Legal experts contend that the EU’s hesitation in using frozen oligarchs' funds as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, undemocratic power over elected governments may be obstructing the finance Ukraine critically depends on.

Empty Promises and Growing Threats

The public was told that these scenarios wouldn’t happen. Years ago, a government leader, championing the most significant and hazardous of all investment pacts, declared: “We’ve signed trade deal after trade deal and there has not been a problem in the past.” A consultant on this matter described critics of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression was crafted to be that exclusively weaker states had to worry about ISDS claims. Predictions that “as corporations begin to understand the influence they’ve been granted, they will shift their focus from the weak nations to the strong ones” were dismissed with widespread derision.

That warning has now materialised. Recently, oil and gas and resource corporations have initiated a unprecedented number of cases against nations across the economic spectrum, contesting – as in the case of the Whitehaven project – official measures to stop environmental catastrophe. Corporations have thus far won $114bn via ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP