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What is your perceive our democratic process operates? Maybe something like this. We elect MPs. They vote on bills. Should a majority is achieved, the bills are enacted as law. The law are enforced by the courts. Simple as that. Well, that used to be how it used to work. No longer.

The Advent of Offshore Courts

Today, overseas companies, or the wealthy individuals behind them, are able to litigate against elected administrations for the regulations they pass, at offshore tribunals staffed by business advocates. These proceedings are conducted behind closed doors. Unlike our courts, these bodies allow no avenue for appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even companies based in this country. They are open exclusively to corporations based overseas.

When a secret court rules that a legislative action might diminish the corporation’s expected profits, it can award financial penalties of hundreds of millions, even billions.

This compensation represent not tangible damages but compensation the arbitrators conclude the company could potentially have made. The state might be compelled to drop the legislation. It becomes discouraged from enacting future policies in that area, due to the risk of facing litigation.

A Process Growing Exponentially

Record numbers of disputes are being filed, as firms take cues from each other, and hedge funds fund legal actions in exchange for a share of the awards. The result? National sovereignty and popular rule are becoming too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to override national legislation and the decisions enacted by legislatures is that this clause has been incorporated – without public consent, and frequently under conditions of total confidentiality – into trade treaties.

A Specific Instance: The Whitehaven Coalmine

Last year, activists secured a significant win at the High Court. The presiding officer found that proposals to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were found to be illegally sanctioned by the Conservative government, which had agreed to the bizarre claim that the mine would have no impact on national carbon targets. The new government then withdrew the consent the former government had approved. Now, this legal outcome could be compromised by an secret arbitration panel answering to no one but the corporations petitioning it.

Last August, a firm whose beneficial owners reside in the offshore financial centre initiated proceedings against the UK government. Recently a arbitration panel in Washington DC was set up to hear it.

The claimant is litigating against the UK for the revenue it could have earned if the mine had been allowed to commence operations. Citizens have little idea how much this sum represents. Which individual is acting on its behalf in opposition to the British government? A sitting MP, and former attorney-general in the outgoing administration, that great patriot Sir Geoffrey Cox. The administration passes a law, the high court validates it, then a international entity disputes it through an secretive private court, and a member of our parliament represents its behalf.

The Russian Case

Simultaneously that the panel on the coal mine dispute was established, information emerged from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case at present, but it seems likely that he will utilise the tribunal to fight the restrictions the UK imposed on him after the Russian aggression. He has previously filed a claim against Luxembourg for this reason, demanding $16bn: an amount representing half government’s yearly budget. Among the counsel acting for him in that case? a prominent lawyer, married to the former British prime minister.

International law scholars argue that the EU’s procrastination in utilising seized Russian assets as guarantee for its aid for Ukraine is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This remarkable, unaccountable authority over sovereign states might be preventing the funds Ukraine critically depends on.

False Assurances and Mounting Costs

The public was told that such things could not occur. In 2014, a senior politician, promoting the biggest and most dangerous of all investment pacts, told us: “Britain has agreed to trade agreement after trade deal and there has not been a problem in the past.” An expert on this issue described campaigners of “alarmism … the truth is, ISDS does not affect the UK much”. The overall message appeared to be that only poorer nations had to worry about such legal actions. Cautionary notes that “when companies grasp the authority they now possess, they will shift their focus from the weak nations to the wealthy nations” were greeted by general mockery.

That prediction is now a reality. In the current period, oil and gas and mining firms have filed a unprecedented number of claims against nations across the economic spectrum, contesting – like the example of the Whitehaven project – state efforts to stop global warming. Companies have thus far won $114bn via ISDS, of which fossil fuel companies have been awarded eighty-four billion dollars. That represents the combined GDP