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What is your reckon our democratic process functions? Maybe something like this. Citizens choose MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. Legislation is upheld by the courts. Simple as that. Well, that was how it once functioned. Not anymore.

The Emergence of Shadow Tribunals

Nowadays, foreign corporations, and the billionaires that control them, can sue nation states for the regulations they pass, at offshore tribunals made up of business advocates. Such disputes are conducted behind closed doors. Differing from national judiciaries, these panels provide no avenue for appeal or legal review. The general public are unable to file a case to them, and neither can our government, or even businesses based in this country. They are open solely for corporations based overseas.

If a tribunal rules that a legislative action could harm the corporation’s expected profits, it may order damages of hundreds of millions, running into billions.

These awards represent not actual losses but money the arbitrators determine the company might otherwise have made. The government might be compelled to drop the legislation. It becomes deterred from enacting future policies along the same lines, for fear of facing litigation.

A System Spiralling Out of Control

Historically high figures of disputes are being brought, as firms observe each other, and investment funds finance suits in exchange for a share of the takings. The outcome? National sovereignty and popular rule are turning into unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to override domestic law and the rulings enacted by parliaments is that this stipulation has been inserted – without democratic mandate, and typically amid a climate of profound opacity – into bilateral investment treaties.

A Concrete Instance: The Whitehaven Coal Mine

A year ago, environmental campaigners secured a significant win at the senior court. The presiding officer determined that schemes to excavate the first deep coalmine in the UK for three decades, at Whitehaven in Cumbria, were unlawfully approved by the previous government, which had agreed to the bizarre claim that the mine would have zero effect on climate commitments. The incoming administration subsequently revoked the consent the previous administration had issued. Currently, this victory could be compromised by an secret arbitration panel answering to only the companies filing the suit.

In August, a firm whose beneficial owners are based in the tax haven lodged a claim versus the UK government. The previous week a arbitration panel in the US capital was established to adjudicate on it.

The company is seeking compensation from the UK for the profits it might have made if the mine had received permission to commence operations. Citizens have no idea how much this sum represents. Which individual is serving as its counsel against the British government? A member of parliament, and previous senior legal advisor in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration enacts a policy, the high court validates it, then a overseas corporation disputes it through an undemocratic offshore tribunal, and a sitting MP represents its behalf.

The Russian Challenge

On the same day that the tribunal on the coal mine dispute was convened, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows nothing of the case to date, but it seems likely that he’ll use the arbitration process to contest the sanctions the UK imposed on him following the Russian aggression. He has previously initiated proceedings against another European state on these grounds, demanding a colossal sum: half that nation's yearly income. Included in the counsel representing him there? Cherie Blair, married to the former British prime minister.

Trade specialists argue that the EU’s hesitation in utilising seized Russian assets as security for its loan to Ukraine arises from concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, secretive influence over elected governments could be blocking the finance Ukraine urgently requires.

Misleading Claims and Mounting Costs

We were assured that these events were not possible. Previously, a government leader, advocating for the most significant and hazardous of all these agreements, declared: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” An adviser on this issue accused campaigners of “scaremongering … in reality, ISDS has little impact on the UK much”. The overall message appeared to be that only poorer nations should be concerned by such legal actions. Predictions that “when companies grasp the influence bestowed upon them, they will redirect their efforts from the vulnerable countries to the strong ones” were greeted by widespread derision.

That warning has now materialised. In the current period, fossil fuel and mining firms have filed a unprecedented number of claims against nations both wealthy and developing, opposing – similar to the UK mine – official measures to prevent environmental catastrophe. Companies have to date won $114bn via ISDS, of which oil majors have obtained eighty-four billion dollars. That represents the combined GDP