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How do you understand our democratic process works? Maybe similar to this. We elect MPs. They vote on bills. If a majority is achieved, the bills become law. The law are enforced by the courts. End of story. Yet, that used to be how it operated in the past. No longer.

The Rise of Offshore Courts

In the modern era, international firms, along with the oligarchs behind them, are able to litigate against nation states for the policies they pass, at private courts composed of commercial attorneys. The cases are held away from public scrutiny. In contrast to domestic courts, these tribunals allow no opportunity to appeal or judicial review. Ordinary citizens are unable to file a case to them, and neither can our government, including businesses headquartered in this country. Access is granted exclusively to corporations registered abroad.

Should an arbitration panel finds that a legislative action might diminish the corporation’s anticipated profits, it has the power to grant damages of vast sums, even billions.

These awards represent not tangible damages but compensation the arbitrators decide the company could potentially have made. The state could be forced to drop the legislation. It is discouraged from enacting future policies of a similar nature, worried about facing litigation.

A System Spiralling Out of Control

Record numbers of legal actions are being initiated, as corporations observe each other, and private equity fund legal actions in return for a portion of the awards. The result? Sovereignty and popular rule are turning into prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump a country's own laws and the choices taken by legislatures is that this provision has been inserted – without public consent, and often in a climate of total confidentiality – inside trade treaties.

A Concrete Case: The Whitehaven Coalmine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer ruled that proposals to dig the first deep coalmine in the UK for three decades, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had accepted the bizarre claim that the mine would have had no consequence on climate commitments. The incoming administration then withdrew the licence the Tories had approved. Now, this victory faces being overturned by an foreign court reporting to exclusively the corporations filing the suit.

During August, a firm whose beneficial owners are based in the offshore financial centre lodged a claim against the UK government. The previous week a arbitration panel in the US capital was convened to adjudicate on it.

This firm is litigating against the UK for the profits it would have generated if the mine had received permission to go ahead. The public has little idea how much this could amount to. Which individual is acting on its behalf against the British government? A member of parliament, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The state makes a decision, the domestic court supports it, then a overseas corporation disputes it through an secretive offshore tribunal, and a elected official acts on its behalf.

The Russian Challenge

On the same day that the panel on the mining lawsuit was appointed, it was revealed from a ministerial statement that the UK is also being sued under ISDS by a wealthy Russian individual, an oligarch. Details are little of the case so far, but it seems likely that he will utilise the tribunal to fight the penalties the UK enacted against him after the invasion of Ukraine. He has previously started suing a small nation with similar intent, claiming $16bn: an amount representing half nation's yearly income. Included in the lawyers representing him there? Cherie Blair, spouse of the ex-UK leader.

Legal experts contend that the EU’s delay in utilising seized Russian assets as collateral for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the secret arbitration panels, under a bilateral investment treaty. This extraordinary, undemocratic power over elected governments might be preventing the funds Ukraine desperately needs.

Misleading Claims and Mounting Threats

The public was told that such things could not occur. Years ago, a senior politician, championing the largest and riskiest of all these agreements, told us: “The UK has signed trade agreement after trade deal and there has never been a issue in the past.” An adviser on this issue accused activists of “exaggeration … the fact is, ISDS does not affect the UK much”. The general impression seemed to be that exclusively weaker states had to worry about ISDS claims. Cautionary notes that “as corporations begin to understand the influence they’ve been granted, they will redirect their efforts from the poorer states to the strong ones” were dismissed with general mockery.

That threat is now a reality. This year, oil and gas and extraction companies have initiated a historic level of cases against nations rich and poor, opposing – similar to the Cumbrian coalmine – state efforts to halt environmental catastrophe. Companies have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have obtained eighty-four billion dollars. That represents the combined GDP