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Can you reckon our democratic process operates? Perhaps similar to this. Citizens choose MPs. They vote on bills. Should a majority is obtained, the bills pass into law. Legislation is upheld by the courts. Simple as that. Yet, that was how it used to work. No longer.

The Rise of Offshore Courts

In the modern era, international firms, or the oligarchs who own them, have the power to sue governments for the regulations they pass, at offshore tribunals composed of corporate lawyers. The cases are held in secret. Unlike our courts, these bodies grant no opportunity to appeal or oversight by judges. You or I are unable to file a case to them, and neither can our government, or even companies headquartered in this country. The door is open exclusively to entities registered abroad.

If a tribunal determines that a legislative action could harm the corporation’s anticipated profits, it may order damages of vast sums, even billions.

This compensation constitute not actual losses but money the arbitrators conclude the company would perhaps have made. The administration may have to rescind the measure. It becomes hesitant to passing future laws of a similar nature, due to the risk of being sued.

A Process Running Rampant

Unprecedented levels of legal actions are being filed, as corporations observe each other, and hedge funds finance suits for a share of a portion of the takings. The consequence? Sovereignty and democracy are now prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it is allowed to supersede a country's own laws and the decisions enacted by elected bodies is that this stipulation has been incorporated – without public consent, and frequently under conditions of total confidentiality – into trade treaties.

A Concrete Case: The Whitehaven Coalmine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The justice determined that schemes to excavate the first deep coalmine in the UK for a generation, in Cumbria, had been illegally sanctioned by the Conservative government, which had accepted the extraordinary assertion that the mine would have had no consequence on climate commitments. The incoming administration then withdrew the permission the former government had issued. Today, this victory could be compromised by an foreign court answering to only the companies bringing the case.

In August, a corporate entity whose final controllers are located in the Cayman Islands lodged a claim versus the UK government. The previous week a dispute settlement body in the US capital was convened to adjudicate on it.

This firm is litigating against the UK for the revenue it might have made 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 challenging the UK administration? A sitting MP, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The administration makes a decision, the high court upholds it, then a international entity contests it through an unaccountable arbitration panel, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

Concurrently that the panel on the coal mine dispute was appointed, it was revealed from a government response that the UK is subject to further litigation under ISDS by a Russian billionaire, a sanctioned individual. The public knows scarce of the case so far, but it appears probable that he will utilise the arbitration process to contest the penalties the UK imposed on him following the Russian aggression. He has started suing another European state for this reason, seeking $16bn: half that nation's yearly budget. Among the lawyers representing him there? Cherie Blair, married to the former British prime minister.

Legal experts believe that the EU’s procrastination in using frozen Russian assets as security for its aid for Ukraine is due to apprehension in Brussels that it could be sued in the offshore corporate courts, under a trade agreement. This extraordinary, secretive influence over elected governments might be preventing the funds Ukraine urgently requires.

Empty Promises and Mounting Threats

The public was told that these scenarios were not possible. Previously, a government leader, advocating for the biggest and most dangerous of all investment pacts, declared: “Britain has agreed to trade agreement after trade deal and we have never seen a issue in the past.” A consultant on this topic labelled activists of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that solely developing countries needed to fear ISDS claims. Predictions that “when companies grasp the authority bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with widespread derision.

That threat has come to pass. In the current period, oil and gas and mining firms have initiated a record number of cases against nations rich and poor, contesting – like the example of the Whitehaven project – state efforts to stop environmental catastrophe. Companies have thus far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP