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What is your perceive our democratic process works? Maybe something like this. Citizens choose MPs. They debate and pass bills. Should a majority is achieved, the bills become law. The law are enforced by the courts. Simple as that. Well, that used to be how it used to work. Not anymore.

The Advent of Secret Courts

Today, international firms, along with the oligarchs behind them, are able to litigate against nation states for the regulations they pass, at private courts composed of corporate lawyers. Such disputes take place in secret. Unlike our courts, these panels provide no opportunity to appeal or judicial review. The general public are barred from bringing a case to them, just as our government, or even enterprises operating from this country. The door is open exclusively to entities operating from foreign soil.

When a secret court finds that a government measure might diminish the corporation’s expected profits, it may order damages of vast sums, potentially billions.

These sums are based not on tangible damages but compensation the panel members determine the company might otherwise have made. The administration might be compelled to rescind the measure. It is deterred from passing future laws in that area, for fear of being sued.

A Process Spiralling Out of Control

Record numbers of cases are being filed, as corporations observe each other, and hedge funds fund legal actions in return for a cut of the settlements. The consequence? Democratic sovereignty and democratic governance are becoming too costly.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the choices enacted by legislatures is that this stipulation has been inserted – without public consent, and often in an atmosphere of total confidentiality – into trade treaties.

A Specific Case: The UK Coal Mine

Twelve months ago, a conservation group won a great victory at the senior court. The presiding officer ruled that schemes to dig the first new deep coal mine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had endorsed the bizarre claim that the mine could have no consequence on national carbon targets. The new government then withdrew the permission the previous administration had granted. Now, this success could be compromised by an foreign court accountable to only the companies filing the suit.

Last August, a company whose final controllers are located in the tax haven lodged a claim against the UK government. Recently a dispute settlement body in Washington DC was set up to consider the case.

This firm is litigating against the UK for the revenue it might have made if the mine had received permission to commence operations. We have little idea how much this could amount to. What legal team is serving as its counsel in opposition to the state? A member of parliament, and ex-law officer in the outgoing administration, that great patriot Sir Geoffrey Cox. The government passes a law, the high court upholds it, then a overseas corporation contests it through an undemocratic arbitration panel, and a elected official works for its behalf.

The Russian Challenge

Simultaneously that the panel on the mining lawsuit was established, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. We know little of the case at present, but it is highly possible that he may employ the arbitration process to contest the sanctions the UK imposed on him after the Russian aggression. He has previously initiated proceedings against another European state on these grounds, demanding $16bn: half that nation's yearly budget. Among the legal team on his side? a prominent lawyer, spouse of the former British prime minister.

Legal experts believe that the EU’s procrastination in utilising seized oligarchs' funds as guarantee for its financial support package is due to Belgium’s fear that it could be taken to court in the ISDS tribunals, under a trade agreement. This remarkable, secretive influence over democratic administrations could be blocking the finance Ukraine desperately needs.

Misleading Claims and Growing Costs

We were assured that such things wouldn’t happen. In 2014, a former prime minister, championing the largest and riskiest of all investment pacts, declared: “We’ve signed trade agreement upon trade deal and there has never been a issue in the past.” An adviser on this issue accused critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries had to worry about these lawsuits. Cautionary notes that “as corporations begin to understand the authority bestowed upon them, they will turn their attention from the weak nations to the strong ones” were dismissed with widespread derision.

That prediction has now materialised. In the current period, energy and extraction companies have lodged a unprecedented number of suits against nations both wealthy and developing, contesting – as in the case of the UK mine – government attempts to halt environmental catastrophe. Corporations have so far won $114bn by using ISDS, of which oil majors have obtained eighty-four billion dollars. That equates to the combined GDP