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How do you understand our democratic process works? It could be similar to this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. The law are enforced by the courts. That's it. Yet, that was how it operated in the past. Not anymore.

The Rise of Offshore Courts

Today, foreign corporations, or the oligarchs that control them, are able to litigate against governments for the policies they pass, at secret arbitration panels composed of corporate lawyers. These proceedings are held behind closed doors. Unlike our courts, these tribunals allow no right of appeal or oversight by judges. Ordinary citizens cannot take a case to them, nor can our government, or even enterprises based in this country. They are open exclusively to businesses based overseas.

Should an arbitration panel finds that a law or policy might diminish the corporation’s anticipated profits, it may order compensation of hundreds of millions, potentially billions.

These sums are based not on tangible damages but compensation the tribunal officials decide the company would perhaps have made. The administration may have to drop the legislation. It is hesitant to passing future laws along the same lines, due to the risk of incurring a lawsuit.

A Process Running Rampant

Historically high figures of cases are being initiated, as corporations observe each other, and investment funds finance suits in return for a share of the awards. The outcome? Sovereignty and democratic governance are becoming unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The reason it can trump national legislation and the rulings taken by elected bodies is that this stipulation has been inserted – without democratic mandate, and frequently under conditions of profound opacity – into trade treaties.

A Real-World Case: The Whitehaven Coal Mine

Last year, activists won a great victory at the High Court. The presiding officer determined that schemes to open the first major coal mine in the UK for a generation, in northwest England, were found to be illegally sanctioned by the previous government, which had endorsed the extraordinary assertion that the mine would have had zero effect on climate commitments. The Labour government subsequently revoked the licence the previous administration had issued. Today, this legal outcome is under threat by an foreign court reporting to only the companies petitioning it.

In August, a company whose ultimate owners are based in the Cayman Islands filed a lawsuit versus the UK government. Recently a arbitration panel in Washington DC was convened to adjudicate on it.

The company is suing the UK for the profits it could have earned if the mine had been permitted to go ahead. The public has no idea how much this might be. Who is serving as its counsel challenging the UK administration? A member of parliament, and former attorney-general in the previous government, the noted patriot Geoffrey Cox. The government makes a decision, the domestic court upholds it, then a overseas corporation contests it through an secretive arbitration panel, and a sitting MP represents its behalf.

An Oligarch's Lawsuit

Concurrently that the panel on the coal mine dispute was appointed, it was revealed from a parliamentary answer that the UK is subject to further litigation under ISDS by a Russian oligarch, an oligarch. Details are scarce of the case at present, but it appears probable that he will utilise the tribunal to challenge the penalties the UK enacted against him following the Russian aggression. He has already started suing a small nation with similar intent, seeking sixteen billion dollars: equivalent to half of state's yearly income. Included in the counsel representing him there? Cherie Blair, married to the former British prime minister.

Trade specialists argue that the EU’s hesitation in using frozen Russian assets as guarantee for its aid for Ukraine arises from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This remarkable, undemocratic power over sovereign states might be preventing the money Ukraine critically depends on.

False Assurances and Mounting Threats

We were assured that these scenarios were not possible. In 2014, a government leader, advocating for the biggest and most dangerous of all such treaties, declared: “Britain has agreed to trade deal after trade deal and there has never been a issue in the past.” An expert on this topic described campaigners of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that exclusively weaker states needed to fear ISDS claims. Warnings that “once firms grasp the authority they’ve been granted, they will redirect their efforts from the weak nations to the strong ones” were met with general mockery.

That warning has now materialised. In the current period, fossil fuel and mining firms have lodged a record number of cases against nations rich and poor, challenging – as in the case of the UK mine – official measures to stop climate breakdown. Companies have so far won $114bn by using ISDS, of which oil majors have secured the majority. That equates to the combined GDP