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What is your perceive our democratic process operates? Maybe similar to this. We elect MPs. They legislate on bills. When a majority is achieved, the bills pass into law. The law is maintained by the courts. End of story. Yet, that was how it once functioned. Not anymore.

The Rise of Secret Tribunals

Today, foreign corporations, along with the billionaires that control them, can sue elected administrations for the regulations they pass, at secret arbitration panels composed of commercial attorneys. The cases take place away from public scrutiny. In contrast to domestic courts, these tribunals grant no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even businesses headquartered in this country. Access is granted only to corporations registered abroad.

Should an arbitration panel determines that a government measure may compromise the corporation’s anticipated profits, it can award financial penalties of hundreds of millions, even billions.

These sums represent not actual losses but compensation the tribunal officials conclude the company might otherwise have made. The state could be forced to drop the legislation. It is deterred from introducing similar legislation in that area, due to the risk of facing litigation.

A Process Spiralling Out of Control

Historically high figures of disputes are being filed, as companies learn from each other, and investment funds bankroll lawsuits in exchange for a cut of the settlements. The outcome? Sovereignty and democracy are now prohibitively expensive.

The process is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede a country's own laws and the rulings made by parliaments is that this stipulation has been incorporated – absent public approval, and often in an atmosphere of profound opacity – into bilateral investment treaties.

A Real-World Example: The Whitehaven Coal Mine

Last year, activists won a great victory at the senior court. The judge determined that proposals to open the first deep coalmine in the UK for three decades, in Cumbria, were found to be wrongly permitted by the Conservative government, which had agreed to the questionable argument that the mine could have no consequence on our carbon budgets. The new government subsequently revoked the permission the former government had granted. Today, this legal outcome faces being overturned by an offshore tribunal reporting to exclusively the companies bringing the case.

During August, a corporate entity whose ultimate owners are based in the Cayman Islands filed a lawsuit challenging the UK government. Recently a dispute settlement body in the US capital was established to hear it.

The company is litigating against the UK for the money it would have generated if the mine had been permitted to proceed. We have no idea how much this could amount to. Who is representing it in opposition to the UK administration? An elected representative, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The government enacts a policy, the national judiciary upholds it, then a international entity disputes it through an secretive offshore tribunal, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

Simultaneously that the panel on the coal mine dispute was convened, information emerged from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are little of the case to date, but it seems likely that he’ll use the ISDS mechanism to fight the sanctions the UK imposed on him subsequent to the Russian aggression. He has already initiated proceedings against Luxembourg on these grounds, demanding sixteen billion dollars: an amount representing half government’s annual revenue. Among the legal team acting for him in that case? the wife of a former prime minister, wife of the previous PM.

International law scholars contend that the EU’s hesitation in using frozen oligarchs' funds as security for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This extraordinary, undemocratic power over democratic administrations could be blocking the finance Ukraine critically depends on.

Misleading Claims and Mounting Costs

We were assured that these events were not possible. In 2014, a government leader, championing the largest and riskiest of all these agreements, stated: “Britain has agreed to investment treaty upon trade deal and there has not been a problem in the past.” An expert on this topic accused campaigners of “scaremongering … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that only poorer nations should be concerned by these lawsuits. Cautionary notes that “as corporations start to realise the power they now possess, they will shift their focus from the weak nations to the strong ones” were dismissed with widespread derision.

That warning has come to pass. In the current period, energy and mining firms have filed a unprecedented number of claims against nations rich and poor, contesting – like the example of the UK mine – state efforts to stop global warming. Companies have to date won $114bn through ISDS, of which energy giants have secured the majority. That is equivalent to the combined GDP