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How do you perceive our democratic process works? Maybe similar to this. We elect MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Statutes is upheld by the courts. That's it. Yet, that was how it used to work. Those days are over.

The Emergence of Shadow Tribunals

Today, foreign corporations, and the oligarchs that control them, are able to litigate against elected administrations for the policies they pass, at private courts made up of corporate lawyers. These proceedings are conducted away from public scrutiny. Differing from national judiciaries, these panels allow no avenue for appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even businesses based in this country. The door is open solely for corporations registered abroad.

If a tribunal finds that a legislative action may compromise the corporation’s expected profits, it may order damages of vast sums, potentially billions.

These awards are based not on tangible damages but money the tribunal officials decide the company might otherwise have made. The government could be forced to abandon its policy. It becomes discouraged from introducing similar legislation along the same lines, due to the risk of facing litigation.

A System Spiralling Out of Control

Unprecedented levels of cases are being filed, as firms learn from each other, and investment funds finance suits in exchange for a portion of the settlements. The result? Democratic sovereignty and democracy are turning into prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it is permitted to override a country's own laws and the choices enacted by legislatures is that this provision has been written – absent public approval, and frequently under a climate of profound opacity – within bilateral investment treaties.

A Real-World Example: The UK Coalmine

A year ago, a conservation group achieved a major legal triumph at the senior court. The justice found that proposals to dig the first major coal mine in the UK for three decades, in Cumbria, were illegally sanctioned by the previous government, which had agreed to the bizarre claim that the mine would have had no consequence on national carbon targets. The Labour government then withdrew the consent the Tories had issued. Now, this victory faces being overturned by an secret arbitration panel answering to only the corporations petitioning it.

In August, a firm whose ultimate owners reside in the Cayman Islands filed a lawsuit against the UK government. Recently a tribunal in the US capital was set up to hear it.

This firm is seeking compensation from the UK for the profits it could have earned if the mine had been permitted to commence operations. Citizens have no idea how much this sum represents. Which individual is acting on its behalf challenging the British government? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot Geoffrey Cox. The state passes a law, the domestic court upholds it, then a international entity challenges it through an secretive private court, and a sitting MP acts on its behalf.

An Oligarch's Challenge

Simultaneously that the tribunal on the coal mine dispute was appointed, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case at present, but it seems likely that he will utilise the arbitration process to challenge the restrictions the UK enacted against him after the Russian aggression. He has previously initiated proceedings against a small nation for this reason, claiming $16bn: an amount representing half state's yearly income. Part of the legal team on his side? the wife of a former prime minister, spouse of the previous PM.

Legal experts argue that the EU’s delay in utilising seized Russian assets as collateral for its financial support package is due to apprehension in Brussels that it could be sued in the secret arbitration panels, under a trade agreement. This remarkable, unaccountable authority over elected governments might be preventing the money Ukraine critically depends on.

False Assurances and Growing Threats

The public was told that these scenarios were not possible. In 2014, a senior politician, championing the biggest and most dangerous of all these agreements, declared: “We’ve signed investment treaty upon trade deal and there has not been a issue in the past.” An expert on this matter labelled critics of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative seemed to be that exclusively weaker states needed to fear ISDS claims. Cautionary notes that “as corporations grasp the influence they now possess, they will turn their attention from the weak nations to the wealthy nations” were greeted by general mockery.

That threat is now a reality. This year, energy and mining firms have lodged a historic level of claims against nations both wealthy and developing, opposing – similar to the Cumbrian coalmine – government attempts to halt climate breakdown. Firms have thus far won vast sums via ISDS, of which energy giants have been awarded $84bn. That is equivalent to the combined GDP