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What is your reckon our democratic process operates? It could be along the lines of this. We elect MPs. They debate and pass bills. Should a majority is achieved, the bills are enacted as law. Legislation is maintained by the courts. End of story. Yet, that used to be how it once functioned. Those days are over.

The Rise of Offshore Courts

Nowadays, foreign corporations, or the wealthy individuals who own them, are able to litigate against nation states for the policies they pass, at private courts composed of corporate lawyers. The cases take place behind closed doors. Unlike our courts, these tribunals allow no avenue for appeal or judicial review. The general public cannot take a case to them, and neither can our government, or even companies based in this country. The door is open solely for entities operating from foreign soil.

Should an arbitration panel finds that a law or policy could harm the corporation’s projected profits, it can award damages of vast sums, potentially billions.

These awards are based not on tangible damages but compensation the panel members decide the company might otherwise have made. The administration may have to abandon its policy. It becomes deterred from enacting future policies of a similar nature, for fear of being sued.

A Process Growing Exponentially

Unprecedented levels of legal actions are being brought, as corporations learn from each other, and investment funds bankroll lawsuits in return for a cut of the takings. The outcome? Sovereignty and democracy are now unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump national legislation and the decisions made by parliaments is that this stipulation has been written – without public consent, and typically amid an atmosphere of profound opacity – into trade treaties.

A Real-World Instance: The Whitehaven Coalmine

Twelve months ago, a conservation group achieved a major legal triumph at the high court. The justice ruled that proposals to dig the first new deep coal mine in the UK for three decades, at Whitehaven in Cumbria, were wrongly permitted by the outgoing administration, which had endorsed the bizarre claim that the mine would have no impact on our carbon budgets. The new government then withdrew the licence the Tories had issued. Today, this legal outcome is under threat by an secret arbitration panel accountable to no one but the companies filing the suit.

During August, a company whose ultimate owners reside in the offshore financial centre filed a lawsuit challenging the UK government. Last week a dispute settlement body in the United States was established to hear it.

This firm is litigating against the UK for the profits it would have generated if the mine had been permitted to commence operations. We have little idea how much this sum represents. Who is acting on its behalf challenging the British government? A sitting MP, and former attorney-general in the outgoing administration, that great patriot Geoffrey Cox. The state enacts a policy, the high court supports it, then a international entity disputes it through an undemocratic offshore tribunal, and a member of our parliament represents its behalf.

A Sanctions Lawsuit

Concurrently that the court on the coal mine dispute was established, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. We know nothing of the case at present, but it is highly possible that he will utilise the tribunal to contest the restrictions the UK enacted against him after the Russian aggression. He has initiated proceedings against Luxembourg for this reason, claiming $16bn: an amount representing half state's yearly budget. Included in the legal team representing him there? the wife of a former prime minister, spouse of the former British prime minister.

Trade specialists contend that the EU’s hesitation in leveraging immobilised Russian assets as security for its loan to Ukraine is due to apprehension in Brussels that it could be taken to court in the ISDS tribunals, under a bilateral investment treaty. This remarkable, undemocratic power over democratic administrations might be preventing the funds Ukraine urgently requires.

False Assurances and Escalating Threats

We were assured that such things could not occur. Years ago, a government leader, advocating for the biggest and most dangerous of all such treaties, stated: “We’ve signed investment treaty after trade deal and there has not been a issue in the past.” An expert on this topic accused activists of “alarmism … in reality, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries needed to fear ISDS claims. Cautionary notes that “as corporations start to realise the power they now possess, they will redirect their efforts from the poorer states to the wealthy nations” were dismissed with widespread derision.

That warning has now materialised. Recently, fossil fuel and resource corporations have initiated a unprecedented number of claims against nations rich and poor, contesting – like the example of the UK mine – official measures to stop climate breakdown. Corporations have so far won $114bn by using ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP