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Can you understand our democratic process works? Perhaps something like this. Citizens choose MPs. They legislate on bills. If a majority is secured, the bills are enacted as law. The law is maintained by the courts. Simple as that. Well, that’s how it operated in the past. No longer.

The Rise of Offshore Courts

Nowadays, overseas companies, and the billionaires that control them, can sue elected administrations for the laws they pass, at private courts staffed by corporate lawyers. These proceedings take place in secret. Unlike our courts, these bodies provide no avenue for appeal or legal review. You or I are unable to file a case to them, nor can our government, or even enterprises based in this country. Access is granted exclusively to corporations operating from foreign soil.

When a secret court finds that a law or policy may compromise the corporation’s anticipated profits, it can award compensation of hundreds of millions of pounds, even billions.

This compensation are based not on real financial harm but funds the tribunal officials conclude the company could potentially have made. The administration might be compelled to drop the legislation. It becomes deterred from passing future laws of a similar nature, for fear of incurring a lawsuit.

A System Growing Exponentially

Historically high figures of legal actions are being brought, as companies take cues from each other, and private equity fund legal actions for a share of a portion of the awards. The outcome? National sovereignty and democratic governance are turning into too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it can trump a country's own laws and the decisions made by elected bodies is that this stipulation has been inserted – without public consent, and typically amid an atmosphere of profound opacity – inside international trade agreements.

A Specific Instance: The UK Coalmine

Last year, environmental campaigners achieved a major legal triumph at the senior court. The justice ruled that schemes to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, had been illegally sanctioned by the Conservative government, which had endorsed the questionable argument that the mine would have had no consequence on our carbon budgets. The incoming administration then withdrew the permission the Tories had issued. Today, this victory could be compromised by an secret arbitration panel answering to only the corporations petitioning it.

Last August, a firm whose ultimate owners are located in the offshore financial centre filed a lawsuit against the UK government. Recently a arbitration panel in the United States was set up to adjudicate on it.

The claimant is seeking compensation from the UK for the profits it would have generated if the mine had received permission to proceed. The public has little idea how much this sum represents. Who is acting on its behalf against the state? A member of parliament, and former attorney-general in the previous government, the self-proclaimed patriot the MP. The state passes a law, the domestic court validates it, then a international entity contests it through an undemocratic arbitration panel, and a elected official represents its behalf.

A Sanctions Case

Concurrently that the tribunal on the coal mine dispute was established, information emerged from a government response that the UK is also being sued under ISDS by a Russian billionaire, an oligarch. The public knows scarce of the case at present, but it is highly possible that he will utilise the arbitration process to contest the penalties the UK imposed on him after the Russian aggression. He has started suing a small nation with similar intent, claiming sixteen billion dollars: equivalent to half of nation's yearly budget. Among the lawyers representing him there? the wife of a former prime minister, wife of the ex-UK leader.

Trade specialists argue that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its financial support package stems from concerns within Belgium that it could be taken to court in the offshore corporate courts, under a trade agreement. This extraordinary, unaccountable authority over elected governments might be preventing the money Ukraine critically depends on.

Misleading Claims and Growing Threats

We were assured that these scenarios wouldn’t happen. Years ago, a government leader, advocating for the most significant and hazardous of all such treaties, stated: “The UK has signed trade deal upon trade deal and there has never been a issue in the past.” An expert on this topic labelled campaigners of “scaremongering … the fact is, ISDS has little impact on the UK much”. The prevailing narrative seemed to be that solely developing countries should be concerned by these lawsuits. Predictions that “as corporations grasp the influence they’ve been granted, they will turn their attention from the weak nations to the strong ones” were met with scepticism.

That threat has come to pass. Recently, oil and gas and extraction companies have lodged a historic level of claims against nations across the economic spectrum, challenging – as in the case of the Cumbrian coalmine – government attempts to halt environmental catastrophe. Companies have thus far won one hundred and fourteen billion dollars through ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP