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Can you reckon our democratic process works? Maybe along the lines of this. Citizens choose MPs. They legislate on bills. When a majority is obtained, the bills pass into law. The law are enforced by the courts. That's it. Yet, that’s how it once functioned. Those days are over.

The Rise of Secret Arbitration Panels

Nowadays, international firms, and the oligarchs that control them, can sue elected administrations for the laws they pass, at secret arbitration panels staffed by corporate lawyers. The cases are held in secret. Unlike our courts, these bodies provide no avenue for appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, or even enterprises operating from this country. Access is granted only to corporations registered abroad.

When a secret court rules that a law or policy may compromise the corporation’s projected profits, it has the power to grant damages of vast sums, running into billions.

These sums constitute not actual losses but funds the panel members conclude the company would perhaps have made. The government could be forced to rescind the measure. It becomes discouraged from introducing similar legislation of a similar nature, for fear of being sued.

A System Running Rampant

Unprecedented levels of legal actions are being filed, as corporations observe each other, and private equity fund legal actions in return for a portion of the settlements. The outcome? Democratic sovereignty and popular rule are becoming prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede domestic law and the choices made by legislatures is that this clause has been written – without democratic mandate, and typically amid conditions of profound opacity – within trade treaties.

A Real-World Instance: The Cumbrian Coalmine

A year ago, environmental campaigners won a great victory at the High Court. The justice determined that plans to excavate the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were found to be unlawfully approved by the Conservative government, which had accepted the extraordinary assertion that the mine would have had no impact on national carbon targets. The new government then withdrew the licence the previous administration had granted. Now, this success faces being overturned by an foreign court reporting to no one but the companies petitioning it.

In August, a corporate entity whose final controllers are located in the offshore financial centre lodged a claim against the UK government. Recently a tribunal in the US capital was set up to consider the case.

The company is litigating against the UK for the profits it might have made if the mine had been allowed to go ahead. Citizens have no idea how much this sum represents. Which individual is serving as its counsel against the British government? A sitting MP, and ex-law officer in the outgoing administration, the self-proclaimed patriot the MP. The government enacts a policy, the national judiciary upholds it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

An Oligarch's Case

On the same day that the panel on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case to date, but it seems likely that he’ll use the arbitration process to challenge the restrictions the UK levied against him following the Russian aggression. He has initiated proceedings against Luxembourg for this reason, seeking $16bn: an amount representing half nation's yearly budget. Part of the lawyers representing him there? Cherie Blair, married to the previous PM.

International law scholars contend that the EU’s delay in leveraging immobilised Russian assets as security for its loan to Ukraine arises from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This remarkable, undemocratic power over elected governments could be blocking the funds Ukraine urgently requires.

False Assurances and Mounting Threats

We were assured that these scenarios were not possible. Years ago, a government leader, championing the biggest and most dangerous of all such treaties, told us: “The UK has signed trade agreement after trade deal and there has never been a problem in the past.” A consultant on this topic described campaigners of “alarmism … in reality, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that only poorer nations needed to fear such legal actions. Warnings that “once firms begin to understand the power bestowed upon them, they will turn their attention from the poorer states to the developed economies” were met with general mockery.

That threat is now a reality. Recently, fossil fuel and extraction companies have initiated a historic level of cases against nations rich and poor, challenging – like the example of the Whitehaven project – state efforts to prevent environmental catastrophe. Firms have thus far won vast sums by using ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP