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How do you understand our democratic process operates? It could be along the lines of this. We elect MPs. They legislate on bills. When a majority is obtained, the bills become law. Legislation is maintained by the courts. That's it. However, that was how it operated in the past. Those days are over.

The Emergence of Offshore Courts

Today, international firms, or the oligarchs who own them, have the power to sue nation states for the policies they pass, at offshore tribunals composed of corporate lawyers. These proceedings are held in secret. In contrast to domestic courts, these bodies provide no right of appeal or legal review. Ordinary citizens are unable to file a case to them, and neither can our government, or even companies operating from this country. The door is open solely for businesses based overseas.

Should an arbitration panel finds that a law or policy might diminish the corporation’s projected profits, it has the power to grant compensation of hundreds of millions, potentially billions.

This compensation are based not on real financial harm but money the tribunal officials determine the company might otherwise have made. The government might be compelled to drop the legislation. It will be hesitant to enacting future policies in that area, for fear of facing litigation.

A Mechanism Growing Exponentially

Historically high figures of cases are being initiated, as companies learn from each other, and investment funds finance suits for a share of a cut of the takings. The consequence? National sovereignty and democratic governance are becoming too costly.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it can trump a country's own laws and the decisions made by parliaments is that this clause has been written – without democratic mandate, and frequently under conditions of extreme secrecy – within bilateral investment treaties.

A Specific Instance: The Whitehaven Coalmine

Twelve months ago, environmental campaigners achieved a major legal triumph at the senior court. The justice determined that schemes to dig the first new deep coal mine in the UK for 30 years, in Cumbria, were illegally sanctioned by the previous government, which had agreed to the extraordinary assertion that the mine would have no impact on our carbon budgets. The Labour government subsequently revoked the consent the Tories had approved. Today, this success faces being overturned by an offshore tribunal answering to no one but the entities bringing the case.

In August, a firm whose ultimate owners are based in the tax haven initiated proceedings versus the UK government. Last week a tribunal in the United States was set up to hear it.

This firm is litigating against the UK for the revenue it could have earned if the mine had received permission to commence operations. We have no idea how much this could amount to. Which individual is acting on its behalf against the UK administration? An elected representative, and former attorney-general in the Conservative government, that great patriot Sir Geoffrey Cox. The administration passes a law, the high court supports it, then a overseas corporation contests it through an secretive offshore tribunal, and a sitting MP works for its behalf.

The Russian Lawsuit

Concurrently that the panel on the coal mine dispute 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 at present, but it appears probable that he will utilise the arbitration process to contest the restrictions the UK levied against him following the Russian aggression. He has already initiated proceedings against another European state on these grounds, demanding a colossal sum: equivalent to half of nation's yearly income. Among the counsel on his side? a prominent lawyer, spouse of the ex-UK leader.

Legal experts contend that the EU’s delay in utilising seized oligarchs' funds as security for its aid for Ukraine arises from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations may be obstructing the finance Ukraine desperately needs.

Empty Promises and Mounting Risks

Politicians promised that such things wouldn’t happen. Years ago, a government leader, promoting the largest and riskiest of all these agreements, declared: “We’ve signed trade deal after trade deal and there has never been a issue in the past.” An expert on this issue accused campaigners of “exaggeration … the fact is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that solely developing countries needed to fear ISDS claims. Warnings that “once firms grasp the influence bestowed upon them, they will shift their focus from the vulnerable countries to the strong ones” were greeted by scepticism.

That warning has come to pass. Recently, fossil fuel and resource corporations have initiated a record number of claims against nations across the economic spectrum, challenging – like the example of the Cumbrian coalmine – official measures to halt environmental catastrophe. Corporations have thus far won vast sums by using ISDS, of which fossil fuel companies have secured the majority. That represents the combined GDP