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What is your perceive our democratic process operates? Perhaps similar to this. The public votes for MPs. They legislate on bills. Should a majority is obtained, the bills become law. The law is upheld by the courts. Simple as that. Well, that used to be how it operated in the past. Those days are over.

The Rise of Secret Courts

In the modern era, overseas companies, or the oligarchs who own them, are able to litigate against governments for the laws they pass, at offshore tribunals made up of business advocates. The cases take place away from public scrutiny. In contrast to domestic courts, these panels grant no right of appeal or judicial review. The general public cannot take a case to them, nor can our government, or even enterprises headquartered in this country. Access is granted exclusively to entities operating from foreign soil.

When a secret court rules that a legislative action could harm the corporation’s projected profits, it can award compensation of hundreds of millions, even billions.

These awards constitute not actual losses but compensation the tribunal officials determine the company could potentially have made. The government could be forced to abandon its policy. It becomes discouraged from passing future laws of a similar nature, due to the risk of facing litigation.

A Process Growing Exponentially

Historically high figures of cases are being initiated, as corporations observe each other, and investment funds finance suits in exchange for a portion of the awards. The result? National sovereignty and popular rule are becoming unaffordable.

The process is called “investor-state dispute settlement” (ISDS). The rationale it can override a country's own laws and the decisions made by parliaments is that this stipulation has been incorporated – without public consent, and typically amid a climate of profound opacity – into trade treaties.

A Real-World Case: The UK Coalmine

Twelve months ago, activists achieved a major legal triumph at the high court. The presiding officer found that schemes to excavate the first major coal mine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the previous government, which had accepted the bizarre claim that the mine could have no consequence on national carbon targets. The Labour government later cancelled the licence the previous administration had approved. Today, this victory faces being overturned by an foreign court answering to no one but the corporations filing the suit.

In August, a corporate entity whose beneficial owners reside in the offshore financial centre initiated proceedings challenging the UK government. The previous week a dispute settlement body in the US capital was established to hear it.

The company is seeking compensation from the UK for the profits it would have generated if the mine had received permission to go ahead. We have little idea how much this could amount to. What legal team is acting on its behalf challenging the UK administration? An elected representative, and previous senior legal advisor in the previous government, the noted patriot the MP. The administration passes a law, the domestic court upholds it, then a international entity challenges it through an secretive offshore tribunal, and a elected official represents its behalf.

An Oligarch's Case

Simultaneously that the tribunal on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. The public knows scarce of the case so far, but it appears probable that he will utilise the ISDS mechanism to fight the restrictions the UK enacted against him after the Russian aggression. He has already filed a claim against Luxembourg with similar intent, claiming a colossal sum: half that nation's yearly income. Included in the counsel acting for him in that case? the wife of a former prime minister, spouse of the previous PM.

International law scholars argue that the EU’s hesitation in using frozen Russian assets as collateral for its financial support package is due to concerns within Belgium that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This unprecedented, undemocratic power over sovereign states might be preventing the money Ukraine desperately needs.

Misleading Claims and Escalating Threats

The public was told that such things could not occur. Previously, a former prime minister, championing the biggest and most dangerous of all these agreements, stated: “Britain has agreed to investment treaty after trade deal and there has not been a issue in the past.” A consultant on this topic labelled campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The general impression was crafted to be that solely developing countries had to worry about such legal actions. Predictions that “as corporations grasp the authority they now possess, they will redirect their efforts from the vulnerable countries to the strong ones” were dismissed with general mockery.

That threat has come to pass. In the current period, fossil fuel and extraction companies have filed a record number of suits against nations both wealthy and developing, contesting – similar to the UK mine – official measures to stop global warming. Companies have to date won vast sums via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP