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Can you understand our democratic process functions? Maybe something like this. We elect MPs. They debate and pass bills. Should a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. That's it. Yet, that was how it operated in the past. Not anymore.

The Advent of Secret Courts

In the modern era, international firms, along with the billionaires that control them, have the power to sue elected administrations for the policies they pass, at private courts made up of corporate lawyers. These proceedings are held in secret. Differing from national judiciaries, these panels grant no right of appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, or even companies operating from this country. They are open solely for entities operating from foreign soil.

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

This compensation constitute not real financial harm but funds the arbitrators decide the company would perhaps have made. The administration may have to drop the legislation. It is hesitant to passing future laws of a similar nature, worried about incurring a lawsuit.

A Process Running Rampant

Historically high figures of legal actions are being filed, as corporations observe each other, and investment funds bankroll lawsuits for a share of a portion of the awards. The consequence? Sovereignty and democracy are turning into prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the rulings enacted by elected bodies is that this provision has been inserted – without democratic mandate, and frequently under a climate of extreme secrecy – inside international trade agreements.

A Specific Instance: The UK Coalmine

A year ago, environmental campaigners secured a significant win at the high court. The justice ruled that proposals to dig the first new deep coal mine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had accepted the questionable argument that the mine would have had no consequence on our carbon budgets. The Labour government then withdrew the licence the previous administration had approved. Now, this legal outcome faces being overturned by an foreign court answering to no one but the companies petitioning it.

Last August, a corporate entity whose final controllers are based in the offshore financial centre filed a lawsuit challenging the UK government. Last week a dispute settlement body in the US capital was convened to consider the case.

This firm is seeking compensation from the UK for the money it could have earned if the mine had been permitted to commence operations. We have no clear indication how much this could amount to. Which individual is serving as its counsel challenging the state? An elected representative, and ex-law officer in the previous government, the noted patriot the MP. The administration passes a law, the high court validates it, then a foreign company challenges it through an secretive private court, and a member of our parliament represents its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a wealthy Russian individual, an oligarch. The public knows nothing of the case at present, but it is highly possible that he will utilise the tribunal to fight the sanctions the UK enacted against him after the Russian aggression. He has initiated proceedings against Luxembourg for this reason, claiming sixteen billion dollars: equivalent to half of nation's annual revenue. Among the lawyers acting for him in that case? the wife of a former prime minister, married to the former British prime minister.

Trade specialists believe that the EU’s delay in using frozen oligarchs' funds as collateral for its financial support package arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, unaccountable authority over democratic administrations could be blocking the finance Ukraine desperately needs.

Misleading Claims and Escalating Costs

The public was told that such things could not occur. In 2014, a former prime minister, advocating for the biggest and most dangerous of all these agreements, stated: “We’ve signed investment treaty after trade deal and we have never seen a problem in the past.” An expert on this matter accused critics of “exaggeration … in reality, ISDS does not affect the UK much”. The overall message seemed to be that exclusively weaker states needed to fear such legal actions. Cautionary notes that “as corporations start to realise the authority they’ve been granted, they will turn their attention from the poorer states to the strong ones” were greeted by scepticism.

That warning has now materialised. In the current period, oil and gas and extraction companies have filed a historic level of claims against nations rich and poor, challenging – like the example of the UK mine – government attempts to halt environmental catastrophe. Firms have so far won vast sums by using ISDS, of which energy giants have obtained the majority. That is equivalent to the combined GDP