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What is your perceive our democratic process works? Maybe similar to this. Citizens choose MPs. They legislate on bills. When a majority is secured, the bills become law. Legislation is upheld by the courts. End of story. Well, that was how it once functioned. No longer.

The Emergence of Offshore Courts

Today, overseas companies, and the billionaires that control them, have the power to sue elected administrations for the regulations they pass, at private courts staffed by business advocates. These proceedings take place behind closed doors. Unlike our courts, these panels provide no opportunity to appeal or legal review. Ordinary citizens cannot take a case to them, just as our government, or even enterprises operating from this country. The door is open solely for corporations based overseas.

Should an arbitration panel determines that a legislative action might diminish the corporation’s projected profits, it may order damages of vast sums, running into billions.

These awards represent not real financial harm but funds the tribunal officials decide the company might otherwise have made. The government may have to abandon its policy. It becomes deterred from introducing similar legislation along the same lines, for fear of incurring a lawsuit.

A Process Running Rampant

Unprecedented levels of cases are being brought, as firms learn from each other, and private equity finance suits for a share of a share of the takings. The result? Sovereignty and popular rule are becoming prohibitively expensive.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to supersede domestic law and the decisions enacted by legislatures is that this provision has been written – absent public approval, and often in a climate of extreme secrecy – inside trade treaties.

A Specific Instance: The UK Coalmine

Last year, environmental campaigners achieved a major legal triumph at the high court. The presiding officer determined that schemes to open the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the previous government, which had accepted the extraordinary assertion that the mine would have had zero effect on our carbon budgets. The Labour government subsequently revoked the permission the previous administration had granted. Today, this success could be compromised by an secret arbitration panel accountable to exclusively the corporations petitioning it.

In August, a company whose final controllers reside in the offshore financial centre filed a lawsuit versus the UK government. Recently a arbitration panel in the United States was set up to adjudicate on it.

The company is suing the UK for the profits it could have earned if the mine had been allowed to commence operations. The public has no idea how much this could amount to. What legal team is serving as its counsel challenging the UK administration? A member of parliament, and ex-law officer in the previous government, that great patriot Sir Geoffrey Cox. The government passes a law, the domestic court supports it, then a foreign company disputes it through an unaccountable private court, and a sitting MP acts on its behalf.

The Russian Lawsuit

Simultaneously that the panel on the coal mine dispute was appointed, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. The public knows little of the case so far, but it appears probable that he will utilise the ISDS mechanism to challenge the penalties the UK enacted against him after the war in Ukraine. He has previously initiated proceedings against a small nation on these grounds, seeking sixteen billion dollars: an amount representing half nation's annual revenue. Part of the legal team representing him there? Cherie Blair, married to the ex-UK leader.

International law scholars believe that the EU’s delay in utilising seized state funds as collateral for its financial support package stems from apprehension in Brussels that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, undemocratic power over elected governments could be blocking the finance Ukraine desperately needs.

False Assurances and Mounting Threats

Politicians promised that such things could not occur. Previously, a senior politician, advocating for the biggest and most dangerous of all investment pacts, stated: “The UK has signed investment treaty after trade deal and there has not been a case in the past.” A consultant on this topic accused activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The prevailing narrative seemed to be that exclusively weaker states needed to fear these lawsuits. Cautionary notes that “when companies begin to understand the influence they’ve been granted, they will shift their focus from the weak nations to the developed economies” were dismissed with general mockery.

That threat is now a reality. This year, fossil fuel and mining firms have initiated a record number of cases against nations across the economic spectrum, challenging – as in the case of the UK mine – government attempts to prevent global warming. Companies have to date won one hundred and fourteen billion dollars through ISDS, of which oil majors have secured the majority. That is equivalent to the combined GDP