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How do you perceive our democratic process works? Maybe something like this. We elect MPs. They vote on bills. Should a majority is secured, the bills become law. Statutes is maintained by the courts. End of story. However, that was how it once functioned. Those days are over.

The Advent of Offshore Courts

In the modern era, foreign corporations, and the wealthy individuals that control them, are able to litigate against elected administrations for the laws they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held away from public scrutiny. Unlike our courts, these panels grant no avenue for appeal or oversight by judges. You or I are unable to file a case to them, nor can our government, including companies operating from this country. They are open solely for businesses based overseas.

When a secret court rules that a legislative action might diminish the corporation’s anticipated profits, it can award financial penalties of vast sums, even billions.

These sums are based not on actual losses but funds the tribunal officials determine the company might otherwise have made. The government could be forced to drop the legislation. It is hesitant to passing future laws of a similar nature, for fear of incurring a lawsuit.

A Mechanism Growing Exponentially

Unprecedented levels of legal actions are being filed, as corporations learn from each other, and hedge funds finance suits in return for a cut of the settlements. The consequence? National sovereignty and popular rule are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it is allowed to trump domestic law and the choices made by parliaments is that this clause has been written – absent public approval, and often in a climate of total confidentiality – into trade treaties.

A Concrete Instance: The Whitehaven Coalmine

Last year, activists won a great victory at the High Court. The presiding officer ruled that schemes to dig the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved by the Conservative government, which had endorsed the bizarre claim that the mine could have no consequence on national carbon targets. The new government later cancelled the permission the previous administration had issued. Now, this victory is under threat by an secret arbitration panel reporting to only the companies filing the suit.

In August, a corporate entity whose beneficial owners are located in the tax haven initiated proceedings challenging the UK government. Recently a arbitration panel in the US capital was established to hear it.

This firm is litigating against the UK for the money it would have generated if the mine had received permission to proceed. We have no clear indication how much this might be. What legal team is acting on its behalf against the British government? A sitting MP, and previous senior legal advisor in the outgoing administration, that great patriot Sir Geoffrey Cox. The government enacts a policy, the high court supports it, then a international entity challenges it through an secretive offshore tribunal, and a elected official represents its behalf.

A Sanctions Case

Concurrently that the tribunal on the mining lawsuit was convened, it was revealed from a government response that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. The public knows little of the case so far, but it appears probable that he will utilise the ISDS mechanism to fight the penalties the UK imposed on him after the war in Ukraine. He has previously initiated proceedings against Luxembourg on these grounds, seeking sixteen billion dollars: half that nation's yearly income. Among the lawyers acting for him in that case? a prominent lawyer, wife of the ex-UK leader.

Legal experts contend that the EU’s procrastination in using frozen Russian assets as guarantee for its financial support package is due to apprehension in Brussels that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, undemocratic power over elected governments may be obstructing the finance Ukraine desperately needs.

False Assurances and Mounting Costs

The public was told that these scenarios could not occur. In 2014, a former prime minister, advocating for the largest and riskiest of all investment pacts, told us: “We’ve signed trade agreement after trade deal and there has never been a issue in the past.” An expert on this matter labelled critics of “alarmism … in reality, ISDS barely touches the UK much”. The general impression was crafted to be that exclusively weaker states should be concerned by these lawsuits. Warnings that “once firms start to realise the power they’ve been granted, they will turn their attention from the weak nations to the wealthy nations” were dismissed with general mockery.

That prediction has come to pass. Recently, fossil fuel and resource corporations have initiated a record number of suits against nations across the economic spectrum, contesting – as in the case of the Cumbrian coalmine – state efforts to halt climate breakdown. Corporations have to date won $114bn through ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP