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What is your perceive our democratic process functions? Maybe similar to this. We elect MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Legislation is upheld by the courts. End of story. However, that was how it used to work. Those days are over.

The Emergence of Offshore Courts

Nowadays, overseas companies, and the billionaires behind them, have the power to sue elected administrations for the policies they pass, at offshore tribunals staffed by business advocates. These proceedings take place behind closed doors. Unlike our courts, these panels allow no opportunity to appeal or oversight by judges. You or I are unable to file a case to them, just as our government, or even enterprises based in this country. The door is open solely for businesses registered abroad.

Should an arbitration panel determines that a government measure could harm the corporation’s projected profits, it can award financial penalties of vast sums, running into billions.

This compensation are based not on real financial harm but compensation the panel members decide the company could potentially have made. The state may have to abandon its policy. It becomes hesitant to enacting future policies in that area, worried about incurring a lawsuit.

A Process Spiralling Out of Control

Unprecedented levels of cases are being initiated, as companies observe each other, and hedge funds bankroll lawsuits in exchange for a share of the settlements. The result? National sovereignty and democratic governance are now unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to supersede a country's own laws and the rulings enacted by legislatures is that this stipulation has been inserted – without democratic mandate, and often in a climate of extreme secrecy – into international trade agreements.

A Specific Instance: The Whitehaven Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the High Court. The justice determined that plans to excavate the first major coal mine in the UK for three decades, in Cumbria, had been illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine would have no consequence on climate commitments. The new government subsequently revoked the permission the former government had issued. Today, this victory could be compromised by an offshore tribunal answering to exclusively the entities bringing the case.

Last August, a firm whose beneficial owners reside in the tax haven lodged a claim versus the UK government. The previous week a tribunal in the United States was set up to adjudicate on it.

The company is litigating against the UK for the profits it might have made if the mine had received permission to commence operations. The public has no idea how much this could amount to. What legal team is acting on its behalf challenging the British government? A sitting MP, and ex-law officer in the outgoing administration, the self-proclaimed patriot the MP. The state passes a law, the high court upholds it, then a overseas corporation challenges it through an secretive private court, and a sitting MP acts on its behalf.

An Oligarch's Case

On the same day that the court on the mining lawsuit was convened, we learned from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case so far, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK levied against him following the war in Ukraine. He has already initiated proceedings against Luxembourg for this reason, demanding $16bn: an amount representing half government’s yearly income. Among the lawyers on his side? Cherie Blair, married to the former British prime minister.

Legal experts argue that the EU’s delay in using frozen oligarchs' funds as guarantee for its aid for Ukraine arises from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, unaccountable authority over elected governments might be preventing the money Ukraine critically depends on.

False Assurances and Growing Risks

The public was told that these scenarios were not possible. Years ago, a senior politician, advocating for the most significant and hazardous of all these agreements, told us: “The UK has signed investment treaty after trade deal and we have never seen a problem in the past.” An expert on this issue labelled critics of “alarmism … in reality, ISDS does not affect the UK much”. The overall message was crafted to be that exclusively weaker states needed to fear these lawsuits. Warnings that “when companies start to realise the authority they now possess, they will redirect their efforts from the vulnerable countries to the strong ones” were met with general mockery.

That prediction has now materialised. In the current period, oil and gas and mining firms have filed a record number of suits against nations rich and poor, opposing – similar to the Cumbrian coalmine – government attempts to prevent global warming. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have been awarded $84bn. That represents the combined GDP