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How do you understand our democratic process operates? Perhaps something like this. The public votes for MPs. They debate and pass bills. Should a majority is achieved, the bills become law. The law are enforced by the courts. That's it. Well, that was how it once functioned. Those days are over.

The Emergence of Offshore Courts

In the modern era, international firms, and the billionaires who own them, are able to litigate against governments for the regulations they pass, at offshore tribunals staffed by business advocates. Such disputes take place in secret. In contrast to domestic courts, these panels grant no avenue for appeal or legal review. You or I are unable to file a case to them, just as our government, or even companies headquartered in this country. They are open solely for entities operating from foreign soil.

When a secret court rules that a legislative action might diminish the corporation’s expected profits, it has the power to grant damages of vast sums, running into billions.

This compensation are based not on actual losses but money the panel members determine the company could potentially have made. The government may have to rescind the measure. It will be discouraged from passing future laws of a similar nature, due to the risk of incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of legal actions are being initiated, as corporations observe each other, and hedge funds finance suits for a share of a share of the settlements. The result? Sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the decisions enacted by legislatures is that this clause has been inserted – absent public approval, and frequently under an atmosphere of extreme secrecy – inside bilateral investment treaties.

A Concrete Instance: The Cumbrian Coalmine

A year ago, environmental campaigners secured a significant win at the senior court. The presiding officer found that schemes to open the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, had been illegally sanctioned by the outgoing administration, which had agreed to the questionable argument that the mine would have zero effect on national carbon targets. The incoming administration then withdrew the consent the previous administration had granted. Today, this legal outcome faces being overturned by an offshore tribunal reporting to exclusively the companies petitioning it.

During August, a company whose beneficial owners reside in the Cayman Islands filed a lawsuit challenging the UK government. Recently a tribunal in Washington DC was established to hear it.

This firm is suing the UK for the profits it might have made if the mine had received permission to commence operations. We have little idea how much this might be. What legal team is representing it against the British government? A member of parliament, and ex-law officer in the previous government, the self-proclaimed patriot Geoffrey Cox. The state makes a decision, the high court validates it, then a foreign company disputes it through an undemocratic arbitration panel, and a member of our parliament represents its behalf.

The Russian Challenge

On the same day that the panel on the mining lawsuit was convened, information emerged from a parliamentary answer that the UK is also being sued under ISDS by a Russian oligarch, an oligarch. Details are nothing of the case to date, but it seems likely that he’ll use the arbitration process to challenge the sanctions the UK imposed on him following the Russian aggression. He has previously started suing a small nation for this reason, claiming a colossal sum: equivalent to half of nation's annual revenue. Among the legal team on his side? Cherie Blair, wife of the former British prime minister.

Trade specialists argue that the EU’s procrastination in leveraging immobilised state funds as collateral for its aid for Ukraine arises from apprehension in Brussels that it could be subject to litigation in the offshore corporate courts, under a investment pact. This remarkable, undemocratic power over democratic administrations might be preventing the funds Ukraine critically depends on.

Misleading Claims and Growing Threats

The public was told that such things could not occur. In 2014, a senior politician, championing the largest and riskiest of all such treaties, declared: “We’ve signed trade agreement after trade deal and there has not been a issue in the past.” An expert on this topic accused campaigners of “alarmism … in reality, ISDS does not affect the UK much”. The prevailing narrative was crafted to be that solely developing countries had to worry about these lawsuits. Cautionary notes that “once firms begin to understand the authority they now possess, they will turn their attention from the vulnerable countries to the wealthy nations” were met with general mockery.

That prediction is now a reality. In the current period, oil and gas and mining firms have filed a record number of cases against nations rich and poor, challenging – as in the case of the Whitehaven project – official measures to stop climate breakdown. Corporations have thus far won $114bn via ISDS, of which energy giants have secured eighty-four billion dollars. That is equivalent to the combined GDP