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Can you perceive our democratic process works? Maybe similar to this. Citizens choose MPs. They vote on bills. Should a majority is achieved, the bills pass into law. Statutes is upheld by the courts. That's it. However, that’s how it used to work. Those days are over.

The Advent of Shadow Tribunals

Today, international firms, and the oligarchs who own them, have the power to sue nation states for the regulations they pass, at secret arbitration panels made up of corporate lawyers. These proceedings are conducted behind closed doors. In contrast to domestic courts, these bodies grant no avenue for appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted only to corporations based overseas.

When a secret court finds that a government measure might diminish the corporation’s anticipated profits, it may order damages of hundreds of millions, running into billions.

This compensation constitute not actual losses but money the tribunal officials determine the company would perhaps have made. The government might be compelled to rescind the measure. It becomes discouraged from enacting future policies of a similar nature, due to the risk of being sued.

A Mechanism Growing Exponentially

Record numbers of legal actions are being brought, as firms observe each other, and investment funds finance suits in return for a share of the settlements. The result? National sovereignty and democratic governance are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The explanation it is permitted to trump domestic law and the rulings enacted by parliaments is that this clause has been incorporated – absent public approval, and frequently under an atmosphere of profound opacity – inside bilateral investment treaties.

A Specific Instance: The Whitehaven Coal Mine

A year ago, activists secured a significant win at the High Court. The justice ruled that schemes to open the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had accepted the questionable argument that the mine would have had zero effect on national carbon targets. The incoming administration then withdrew the consent the former government had issued. Currently, this victory could be compromised by an foreign court answering to only the corporations filing the suit.

In August, a corporate entity whose final controllers reside in the tax haven initiated proceedings against the UK government. Recently a tribunal in the US capital was set up to hear it.

The company is suing the UK for the money it could have earned if the mine had received permission to go ahead. Citizens have no clear indication how much this sum represents. What legal team is acting on its behalf challenging the British government? A member of parliament, and ex-law officer in the outgoing administration, the noted patriot Sir Geoffrey Cox. The state enacts a policy, the national judiciary upholds it, then a overseas corporation challenges it through an undemocratic private court, and a member of our parliament acts on its behalf.

An Oligarch's Challenge

Simultaneously that the tribunal on the coal mine dispute was convened, information emerged from a government response that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. We know little of the case at present, but it seems likely that he’ll use the tribunal to fight the penalties the UK imposed on him following the war in Ukraine. He has initiated proceedings against another European state with similar intent, claiming a colossal sum: an amount representing half state's annual revenue. Among the legal team representing him there? the wife of a former prime minister, wife of the previous PM.

Legal experts believe that the EU’s procrastination in using frozen oligarchs' funds as collateral for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over sovereign states might be preventing the funds Ukraine desperately needs.

False Assurances and Growing Threats

We were assured that these scenarios were not possible. In 2014, a senior politician, promoting the largest and riskiest of all such treaties, declared: “The UK has signed trade deal after trade deal and there has not been a case in the past.” A consultant on this matter accused activists of “exaggeration … the truth is, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states needed to fear these lawsuits. Warnings that “once firms begin to understand the influence they now possess, they will turn their attention from the vulnerable countries to the strong ones” were met with widespread derision.

That prediction has come to pass. In the current period, energy and resource corporations have filed a unprecedented number of claims against nations across the economic spectrum, opposing – like the example of the UK mine – official measures to halt global warming. Firms have to date won vast sums by using ISDS, of which fossil fuel companies have secured eighty-four billion dollars. That represents the combined GDP