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What is your reckon our democratic process works? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. Should a majority is secured, the bills are enacted as law. The law is maintained by the courts. End of story. Yet, that used to be how it operated in the past. Those days are over.

The Advent of Shadow Arbitration Panels

In the modern era, foreign corporations, along with the billionaires behind them, have the power to sue nation states for the policies they pass, at offshore tribunals composed of business advocates. Such disputes take place away from public scrutiny. Unlike our courts, these panels grant no opportunity to appeal or oversight by judges. The general public are unable to file a case to them, just as our government, including businesses operating from this country. Access is granted solely for entities operating from foreign soil.

When a secret court determines that a government measure might diminish the corporation’s expected profits, it can award compensation of hundreds of millions of pounds, running into billions.

This compensation are based not on actual losses but compensation the tribunal officials determine the company might otherwise have made. The administration could be forced to drop the legislation. It is discouraged from introducing similar legislation of a similar nature, worried about incurring a lawsuit.

A Mechanism Running Rampant

Historically high figures of cases are being initiated, as companies observe each other, and investment funds finance suits in exchange for a share of the settlements. The outcome? National sovereignty and democracy are becoming prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it can override a country's own laws and the choices taken by legislatures is that this clause has been written – without democratic mandate, and frequently under an atmosphere of total confidentiality – into bilateral investment treaties.

A Real-World Example: The Cumbrian Coalmine

Twelve months ago, environmental campaigners secured a significant win at the high court. The presiding officer found that plans to dig the first new deep coal mine in the UK for a generation, in northwest England, were found to be unlawfully approved by the Conservative government, which had endorsed the questionable argument that the mine would have had no impact on our carbon budgets. The Labour government subsequently revoked the licence the former government had approved. Currently, this success could be compromised by an foreign court accountable to only the corporations petitioning it.

Last August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit challenging the UK government. Last week a arbitration panel in Washington DC was set up to consider the case.

The claimant is seeking compensation from the UK for the money it might have made if the mine had been permitted to commence operations. Citizens have little idea how much this might be. What legal team is acting on its behalf in opposition to the state? A sitting MP, and former attorney-general in the previous government, the noted patriot the MP. The government passes a law, the national judiciary validates it, then a international entity disputes it through an unaccountable private court, and a member of our parliament works for its behalf.

The Russian Challenge

Concurrently that the panel on the coalmine case was convened, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. Details are scarce of the case to date, but it is highly possible that he may employ the tribunal to challenge the sanctions the UK imposed on him after the Russian aggression. He has already started suing another European state for this reason, claiming a colossal sum: equivalent to half of state's annual revenue. Included in the legal team representing him there? a prominent lawyer, spouse of the previous PM.

Trade specialists believe that the EU’s delay in using frozen Russian assets as guarantee for its financial support package is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, undemocratic power over elected governments may be obstructing the money Ukraine desperately needs.

Misleading Claims and Escalating Risks

We were assured that these events wouldn’t happen. Previously, a former prime minister, championing the largest and riskiest of all these agreements, told us: “We’ve signed investment treaty upon trade deal and there has not been a case in the past.” An adviser on this issue described critics of “scaremongering … in reality, ISDS does not affect the UK much”. The general impression seemed to be that only poorer nations should be concerned by ISDS claims. Warnings that “when companies begin to understand the authority bestowed upon them, they will turn their attention from the poorer states to the developed economies” were dismissed with scepticism.

That warning is now a reality. In the current period, oil and gas and extraction companies have initiated a historic level of suits against nations rich and poor, opposing – as in the case of the Whitehaven project – official measures to stop climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars via ISDS, of which energy giants have been awarded $84bn. That equates to the combined GDP