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What is your reckon our democratic process operates? It could be similar to this. The public votes for MPs. They legislate on bills. If a majority is obtained, the bills pass into law. The law are enforced by the courts. Simple as that. However, that was how it operated in the past. No longer.

The Rise of Shadow Courts

In the modern era, international firms, or the billionaires who own them, have the power to sue nation states for the laws they pass, at private courts made up of corporate lawyers. These proceedings are held away from public scrutiny. In contrast to domestic courts, these tribunals allow no right of appeal or legal review. Ordinary citizens are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. The door is open solely for corporations operating from foreign soil.

Should an arbitration panel determines that a law or policy may compromise the corporation’s expected profits, it may order compensation of hundreds of millions, potentially billions.

These awards represent not tangible damages but money the panel members determine the company could potentially have made. The administration may have to drop the legislation. It is deterred from enacting future policies of a similar nature, due to the risk of incurring a lawsuit.

A System Running Rampant

Record numbers of cases are being initiated, as corporations take cues from each other, and hedge funds bankroll lawsuits for a share of a portion of the takings. The outcome? National sovereignty and popular rule are now unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede a country's own laws and the decisions taken by elected bodies is that this provision has been incorporated – absent public approval, and often in a climate of extreme secrecy – into bilateral investment treaties.

A Specific Example: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the high court. The justice found that plans to excavate the first deep coalmine in the UK for a generation, in northwest England, were found to be unlawfully approved by the previous government, which had agreed to the extraordinary assertion that the mine would have no impact on climate commitments. The incoming administration later cancelled the licence the Tories had approved. Currently, this legal outcome faces being overturned by an foreign court answering to exclusively the entities petitioning it.

During August, a firm whose ultimate owners are located in the offshore financial centre lodged a claim against the UK government. Last week a arbitration panel in the United States was set up to consider the case.

The company is suing the UK for the revenue it could have earned if the mine had been allowed to commence operations. The public has little idea how much this could amount to. Which individual is serving as its counsel challenging the UK administration? A sitting MP, and former attorney-general in the Conservative government, that great patriot Geoffrey Cox. The state passes a law, the domestic court supports it, then a overseas corporation disputes it through an undemocratic private court, and a member of our parliament acts on its behalf.

A Sanctions Challenge

Simultaneously that the court on the coal mine dispute 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 scarce of the case at present, but it is highly possible that he’ll use the tribunal to contest the sanctions the UK levied against him subsequent to the Russian aggression. He has initiated proceedings against Luxembourg with similar intent, demanding $16bn: half that nation's yearly budget. Included in the counsel representing him there? a prominent lawyer, spouse of the ex-UK leader.

Trade specialists contend that the EU’s hesitation in utilising seized state funds as collateral for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a investment pact. This remarkable, unaccountable authority over elected governments might be preventing the funds Ukraine urgently requires.

False Assurances and Escalating Threats

We were assured that such things wouldn’t happen. Years ago, a government leader, championing the most significant and hazardous of all investment pacts, stated: “Britain has agreed to trade agreement after trade deal and there has never been a issue in the past.” An adviser on this issue accused campaigners of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression appeared to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “once firms start to realise the authority they now possess, they will redirect their efforts from the vulnerable countries to the strong ones” were dismissed with general mockery.

That prediction is now a reality. This year, fossil fuel and extraction companies have initiated a historic level of claims against nations rich and poor, challenging – similar to the Cumbrian coalmine – official measures to stop global warming. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have been awarded the majority. That is equivalent to the combined GDP