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What is your perceive our democratic process functions? Perhaps something like this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Statutes are enforced by the courts. End of story. Well, that’s how it used to work. Those days are over.

The Advent of Offshore Courts

In the modern era, foreign corporations, and the oligarchs behind them, are able to litigate against elected administrations for the laws they pass, at secret arbitration panels composed of commercial attorneys. The cases are held behind closed doors. Differing from national judiciaries, these tribunals grant no right of appeal or judicial review. Ordinary citizens cannot take a case to them, and neither can our government, or even businesses headquartered in this country. The door is open exclusively to businesses based overseas.

Should an arbitration panel finds that a legislative action may compromise the corporation’s projected profits, it can award compensation of hundreds of millions of pounds, potentially billions.

These sums are based not on actual losses but money the arbitrators decide the company could potentially have made. The government could be forced to rescind the measure. It becomes hesitant to enacting future policies along the same lines, for fear of being sued.

A Process Running Rampant

Historically high figures of cases are being filed, as companies observe each other, and private equity finance suits for a share of a cut of the settlements. The outcome? Democratic sovereignty and democratic governance are becoming unaffordable.

This mechanism is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump a country's own laws and the choices enacted by parliaments is that this stipulation has been written – absent public approval, and frequently under an atmosphere of extreme secrecy – inside bilateral investment treaties.

A Real-World Case: The Whitehaven Coal Mine

A year ago, a conservation group won a great victory at the high court. The presiding officer determined that plans to open the first deep coalmine in the UK for three decades, in northwest England, were found to be wrongly permitted by the outgoing administration, which had agreed to the bizarre claim that the mine would have zero effect on national carbon targets. The new government later cancelled the permission the Tories had approved. Currently, this victory could be compromised by an offshore tribunal reporting to only the corporations petitioning it.

In August, a firm whose beneficial owners are located in the offshore financial centre filed a lawsuit versus the UK government. Recently a tribunal in the US capital was convened to consider the case.

This firm is seeking compensation from the UK for the profits it might have made if the mine had been permitted to go ahead. The public has no clear indication how much this might be. What legal team is serving as its counsel against the state? An elected representative, and previous senior legal advisor in the outgoing administration, the noted patriot Geoffrey Cox. The administration makes a decision, the domestic court validates it, then a foreign company disputes it through an unaccountable offshore tribunal, and a member of our parliament works for its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the coalmine case was appointed, information emerged from a government response that the UK faces another lawsuit under ISDS by a wealthy Russian individual, a sanctioned individual. We know little of the case at present, but it appears probable that he may employ the tribunal to contest the penalties the UK levied against him following the invasion of Ukraine. He has started suing a small nation for this reason, demanding sixteen billion dollars: an amount representing half state's annual revenue. Included in the legal team acting for him in that case? Cherie Blair, wife of the ex-UK leader.

International law scholars believe that the EU’s hesitation in leveraging immobilised Russian assets as security for its loan to Ukraine is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a investment pact. This remarkable, secretive influence over elected governments could be blocking the funds Ukraine desperately needs.

False Assurances and Growing Costs

The public was told that these scenarios could not occur. Years ago, a government leader, promoting the largest and riskiest of all investment pacts, declared: “Britain has agreed to investment treaty upon trade deal and there has never been a problem in the past.” A consultant on this issue labelled campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about such legal actions. Cautionary notes that “when companies begin to understand the power they’ve been granted, they will turn their attention from the vulnerable countries to the strong ones” were dismissed with general mockery.

That prediction is now a reality. In the current period, fossil fuel and mining firms have lodged a unprecedented number of suits against nations across the economic spectrum, contesting – similar to the Cumbrian coalmine – government attempts to prevent environmental catastrophe. Corporations have to date won one hundred and fourteen billion dollars via ISDS, of which oil majors have obtained $84bn. That is equivalent to the combined GDP