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What is your understand our democratic process works? It could be along the lines of this. Citizens choose MPs. They debate and pass bills. When a majority is achieved, the bills are enacted as law. Statutes is maintained by the courts. That's it. However, that was how it used to work. No longer.

The Emergence of Offshore Courts

Today, international firms, and the wealthy individuals that control them, are able to litigate against elected administrations for the laws they pass, at private courts made up of corporate lawyers. Such disputes are conducted behind closed doors. In contrast to domestic courts, these bodies grant no right of appeal or judicial review. You or I are unable to file a case to them, just as our government, or even businesses based in this country. Access is granted exclusively to entities operating from foreign soil.

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

This compensation are based not on real financial harm but compensation the tribunal officials determine the company would perhaps have made. The administration might be compelled to rescind the measure. It is deterred from enacting future policies in that area, for fear of being sued.

A System Spiralling Out of Control

Record numbers of cases are being brought, as corporations learn from each other, and private equity finance suits in exchange for a portion of the takings. The result? Democratic sovereignty and democracy are becoming unaffordable.

The process is known as “investor-state dispute settlement” (ISDS). The explanation it can supersede national legislation and the decisions made by elected bodies is that this provision has been incorporated – absent public approval, and often in an atmosphere of profound opacity – inside bilateral investment treaties.

A Concrete Case: The UK Coal Mine

Last year, environmental campaigners won a great victory at the senior court. The presiding officer found that schemes to excavate the first major coal mine in the UK for 30 years, at Whitehaven in Cumbria, were unlawfully approved by the outgoing administration, which had accepted the extraordinary assertion that the mine could have no consequence on our carbon budgets. The Labour government subsequently revoked the licence the former government had granted. Currently, this victory could be compromised by an offshore tribunal reporting to no one but the corporations petitioning it.

Last August, a firm whose ultimate owners reside in the Cayman Islands filed a lawsuit challenging the UK government. Last week a arbitration panel in Washington DC was established to hear it.

The company is seeking compensation from the UK for the revenue it could have earned if the mine had been permitted to proceed. The public has little idea how much this might be. What legal team is representing it challenging the British government? A member of parliament, and ex-law officer in the previous government, that great patriot Sir Geoffrey Cox. The government enacts a policy, the national judiciary upholds it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a elected official works for its behalf.

The Russian Lawsuit

Concurrently that the panel on the coal mine dispute was established, we learned from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. Details are scarce of the case to date, but it is highly possible that he’ll use the tribunal to challenge the penalties the UK levied against him after the war in Ukraine. He has previously initiated proceedings against a small nation with similar intent, claiming sixteen billion dollars: an amount representing half state's yearly income. Among the counsel on his side? the wife of a former prime minister, married to the ex-UK leader.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as collateral for its aid for Ukraine stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a bilateral investment treaty. This extraordinary, unaccountable authority over elected governments could be blocking the finance Ukraine desperately needs.

False Assurances and Escalating Threats

We were assured that these scenarios were not possible. Previously, a former prime minister, championing the largest and riskiest of all such treaties, told us: “Britain has agreed to investment treaty after trade deal and we have never seen a issue in the past.” A consultant on this matter labelled critics of “scaremongering … the fact is, ISDS does not affect the UK much”. The overall message was crafted to be that solely developing countries had to worry about such legal actions. Cautionary notes that “when companies begin to understand the influence they’ve been granted, they will redirect their efforts from the weak nations to the developed economies” were greeted by widespread derision.

That warning is now a reality. This year, fossil fuel and resource corporations have filed a record number of cases against nations across the economic spectrum, opposing – as in the case of the UK mine – official measures to prevent climate breakdown. Firms have thus far won vast sums through ISDS, of which oil majors have obtained $84bn. That represents the combined GDP