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What is your perceive our democratic process works? Maybe similar to this. The public votes for MPs. They legislate on bills. Should a majority is achieved, the bills become law. Statutes is maintained by the courts. End of story. However, that’s how it once functioned. Those days are over.

The Rise of Shadow Courts

In the modern era, international firms, or the wealthy individuals that control them, can sue governments for the policies they pass, at secret arbitration panels made up of commercial attorneys. The cases are held behind closed doors. Unlike our courts, these bodies provide no avenue for appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, or even enterprises operating from this country. Access is granted only to entities operating from foreign soil.

Should an arbitration panel rules that a law or policy could harm the corporation’s anticipated profits, it may order financial penalties of hundreds of millions, even billions.

These awards are based not on actual losses but money the panel members conclude the company might otherwise have made. The government could be forced to abandon its policy. It is hesitant to passing future laws in that area, due to the risk of being sued.

A Process Running Rampant

Historically high figures of legal actions are being brought, as firms take cues from each other, and private equity finance suits in exchange for a cut of the awards. The result? Sovereignty and democracy are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump domestic law and the decisions enacted by parliaments is that this stipulation has been incorporated – without democratic mandate, and often in a climate of profound opacity – within bilateral investment treaties.

A Real-World Example: The Cumbrian Coal Mine

Last year, environmental campaigners secured a significant win at the High Court. The presiding officer determined that plans to excavate the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the outgoing administration, which had accepted the questionable argument that the mine could have zero effect on our carbon budgets. The Labour government later cancelled the permission the previous administration had issued. Currently, this success could be compromised by an foreign court reporting to only the entities filing the suit.

Last August, a company whose final controllers are based in the offshore financial centre filed a lawsuit challenging the UK government. Recently a tribunal in the United States was established to consider the case.

The company is suing the UK for the revenue it might have made if the mine had been permitted to proceed. We have little idea how much this sum represents. Which individual is serving as its counsel against the UK administration? An elected representative, and former attorney-general in the outgoing administration, the noted patriot Geoffrey Cox. The administration passes a law, the national judiciary supports it, then a overseas corporation contests it through an unaccountable offshore tribunal, and a sitting MP represents its behalf.

A Sanctions Challenge

Concurrently that the tribunal on the coal mine dispute was established, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case to date, but it appears probable that he’ll use the tribunal to fight the restrictions the UK imposed on him subsequent to the invasion of Ukraine. He has started suing another European state with similar intent, seeking sixteen billion dollars: equivalent to half of government’s yearly budget. Part of the legal team representing him there? a prominent lawyer, married to the previous PM.

Legal experts argue that the EU’s procrastination in using frozen oligarchs' funds as guarantee for its financial support package arises from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments could be blocking the funds Ukraine desperately needs.

Empty Promises and Growing Risks

The public was told that such things wouldn’t happen. In 2014, a senior politician, championing the biggest and most dangerous of all investment pacts, told us: “We’ve signed investment treaty after trade deal and there has not been a case in the past.” An expert on this topic accused activists of “scaremongering … the truth is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations should be concerned by these lawsuits. Warnings that “once firms grasp the power they’ve been granted, they will shift their focus from the poorer states to the wealthy nations” were dismissed with general mockery.

That threat has now materialised. In the current period, fossil fuel and extraction companies have initiated a unprecedented number of suits against nations across the economic spectrum, challenging – as in the case of the Cumbrian coalmine – official measures to prevent environmental catastrophe. Firms have to date won one hundred and fourteen billion dollars through ISDS, of which energy giants have secured $84bn. That is equivalent to the combined GDP