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What is your understand our democratic process works? Perhaps similar to this. Citizens choose MPs. They debate and pass bills. When a majority is secured, the bills pass into law. Statutes is maintained by the courts. That's it. Yet, that’s how it once functioned. No longer.

The Rise of Secret Arbitration Panels

Today, foreign corporations, or the wealthy individuals behind them, can sue elected administrations for the policies they pass, at private courts made up of business advocates. These proceedings are conducted behind closed doors. Unlike our courts, these tribunals allow no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, nor can our government, or even businesses headquartered in this country. Access is granted exclusively to businesses based overseas.

If a tribunal finds that a government measure may compromise the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, running into billions.

This compensation are based not on actual losses but funds the arbitrators determine the company could potentially have made. The government might be compelled to abandon its policy. It becomes deterred from enacting future policies in that area, worried about being sued.

A System Running Rampant

Unprecedented levels of cases are being filed, as companies learn from each other, and private equity finance suits for a share of a portion of the settlements. The consequence? Sovereignty and democratic governance are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump domestic law and the rulings enacted by legislatures is that this provision has been written – without democratic mandate, and often in a climate of profound opacity – into international trade agreements.

A Real-World Case: The UK Coalmine

Twelve months ago, a conservation group secured a significant win at the high court. The justice ruled that plans to excavate the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were illegally sanctioned by the Conservative government, which had accepted the extraordinary assertion that the mine would have no consequence on national carbon targets. The new government then withdrew the consent the Tories had issued. Currently, this victory could be compromised by an secret arbitration panel reporting to exclusively the entities bringing the case.

During August, a firm whose beneficial owners are based in the offshore financial centre lodged a claim challenging the UK government. Recently a tribunal in the US capital was convened to adjudicate on it.

The company is suing the UK for the profits it might have made if the mine had been permitted to go ahead. The public has no clear indication how much this sum represents. Which individual is serving as its counsel challenging the UK administration? A sitting MP, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the domestic court upholds it, then a foreign company contests it through an secretive private court, and a sitting MP works for its behalf.

The Russian Case

On the same day that the court on the coalmine case was convened, we learned from a ministerial statement that the UK is subject to further litigation under ISDS by a wealthy Russian individual, a sanctioned individual. Details are little of the case at present, but it is highly possible that he will utilise the tribunal to contest the sanctions the UK enacted against him subsequent to the war in Ukraine. He has already initiated proceedings against another European state for this reason, demanding $16bn: half that state's yearly income. Included in the counsel acting for him in that case? a prominent lawyer, spouse of the previous PM.

Legal experts believe that the EU’s delay in leveraging immobilised state funds as security for its financial support package stems from apprehension in Brussels that it could be sued in the secret arbitration panels, under a trade agreement. This unprecedented, unaccountable authority over democratic administrations might be preventing the money Ukraine critically depends on.

Empty Promises and Escalating Threats

The public was told that these events could not occur. Years ago, a government leader, advocating for the biggest and most dangerous of all investment pacts, stated: “Britain has agreed to investment treaty after trade deal and there has not been a case in the past.” An expert on this matter accused campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The general impression was crafted to be that only poorer nations should be concerned by these lawsuits. Predictions that “as corporations grasp the power they’ve been granted, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with scepticism.

That prediction has come to pass. In the current period, energy and extraction companies have filed a unprecedented number of claims against nations rich and poor, challenging – like the example of the Cumbrian coalmine – government attempts to prevent climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That equates to the combined GDP