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What is your reckon our democratic process functions? Maybe something like this. We elect MPs. They debate and pass bills. Should a majority is secured, the bills become law. The law is maintained by the courts. End of story. Well, that used to be how it operated in the past. Those days are over.

The Advent of Secret Courts

Today, overseas companies, or the oligarchs who own them, can sue elected administrations for the policies they pass, at secret arbitration panels made up of commercial attorneys. These proceedings take place behind closed doors. Unlike our courts, these bodies grant no right of appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even companies based in this country. The door is open only to businesses operating from foreign soil.

When a secret court rules that a law or policy may compromise the corporation’s projected profits, it can award compensation of hundreds of millions of pounds, potentially billions.

This compensation are based not on real financial harm but funds the arbitrators determine the company could potentially have made. The administration might be compelled to rescind the measure. It will be discouraged from passing future laws along the same lines, worried about being sued.

A Mechanism Growing Exponentially

Unprecedented levels of legal actions are being brought, as companies take cues from each other, and private equity bankroll lawsuits in return for a portion of the awards. The outcome? Sovereignty and democracy are now prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it can trump domestic law and the rulings taken by parliaments is that this provision has been incorporated – without democratic mandate, and frequently under an atmosphere of total confidentiality – inside international trade agreements.

A Specific Example: The Cumbrian Coalmine

A year ago, environmental campaigners won a great victory at the high court. The judge found that proposals to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the Conservative government, which had accepted the questionable argument that the mine could have no impact on climate commitments. The new government subsequently revoked the permission the Tories had approved. Today, this success faces being overturned by an foreign court answering to no one but the entities filing the suit.

During August, a corporate entity whose beneficial owners reside in the tax haven initiated proceedings versus the UK government. The previous week a tribunal in the US capital was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the money it might have made if the mine had been permitted to proceed. Citizens have no clear indication how much this could amount to. Which individual is representing it against the UK administration? A member of parliament, and ex-law officer in the Conservative government, that great patriot Geoffrey Cox. The government passes a law, the domestic court validates it, then a overseas corporation contests it through an unaccountable private court, and a elected official acts on its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the coalmine case was convened, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. Details are nothing of the case to date, but it appears probable that he will utilise the arbitration process to fight the sanctions the UK imposed on him subsequent to the Russian aggression. He has filed a claim against a small nation on these grounds, claiming a colossal sum: equivalent to half of state's yearly budget. Included in the legal team representing him there? the wife of a former prime minister, married to the former British prime minister.

Legal experts argue that the EU’s procrastination in using frozen Russian assets as security for its financial support package is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, undemocratic power over democratic administrations could be blocking the finance Ukraine critically depends on.

Misleading Claims and Escalating Risks

Politicians promised that these scenarios were not possible. In 2014, a former prime minister, advocating for 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.” An adviser on this matter described activists of “scaremongering … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear such legal actions. Predictions that “when companies grasp the influence they now possess, they will shift their focus from the poorer states to the developed economies” were dismissed with general mockery.

That warning has come to pass. This year, oil and gas and mining firms have lodged a unprecedented number of claims against nations across the economic spectrum, opposing – like the example of the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Companies have so far won vast sums by using ISDS, of which oil majors have secured $84bn. That is equivalent to the combined GDP