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Can you perceive our democratic process functions? Maybe similar to this. The public votes for MPs. They vote on bills. When a majority is obtained, the bills pass into law. Legislation are enforced by the courts. Simple as that. Well, that’s how it once functioned. Not anymore.

The Emergence of Secret Courts

Today, overseas companies, and the oligarchs behind them, have the power to sue governments for the regulations they pass, at offshore tribunals staffed by corporate lawyers. Such disputes take place in secret. Differing from national judiciaries, these bodies grant no right of appeal or judicial review. Ordinary citizens are unable to file a case to them, just as our government, including companies headquartered in this country. Access is granted exclusively to businesses registered abroad.

Should an arbitration panel determines that a law or policy could harm the corporation’s anticipated profits, it has the power to grant damages of hundreds of millions of pounds, running into billions.

These sums constitute not tangible damages but money the tribunal officials conclude the company could potentially have made. The government might be compelled to drop the legislation. It is hesitant to passing future laws of a similar nature, due to the risk of facing litigation.

A System Spiralling Out of Control

Record numbers of disputes are being filed, as firms take cues from each other, and investment funds finance suits for a share of a share of the settlements. The result? Democratic sovereignty and democratic governance are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The reason it is permitted to override national legislation and the rulings made by parliaments is that this clause has been incorporated – absent public approval, and frequently under a climate of profound opacity – inside bilateral investment treaties.

A Concrete Instance: The UK Coalmine

Twelve months ago, activists achieved a major legal triumph at the high court. The judge determined that schemes to excavate the first new deep coal mine in the UK for a generation, in northwest England, had been illegally sanctioned by the outgoing administration, which had endorsed the bizarre claim that the mine would have had zero effect on climate commitments. The incoming administration later cancelled the consent the Tories had issued. Currently, this victory is under threat by an offshore tribunal reporting to exclusively the entities petitioning it.

During August, a corporate entity whose ultimate owners reside in the offshore financial centre filed a lawsuit challenging the UK government. The previous week a tribunal in Washington DC was convened to consider the case.

The claimant is seeking compensation from the UK for the revenue it would have generated if the mine had received permission to commence operations. We have no idea how much this could amount to. What legal team is representing it challenging the British government? A sitting MP, and ex-law officer in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court supports it, then a foreign company disputes it through an unaccountable private court, and a member of our parliament represents its behalf.

The Russian Case

Simultaneously that the court on the coalmine case was appointed, we learned from a government response that the UK is also being sued under ISDS by a Russian oligarch, Mikhail Fridman. We know little of the case at present, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK imposed on him subsequent to the Russian aggression. He has previously initiated proceedings against another European state for this reason, seeking $16bn: equivalent to half of state's annual revenue. Part of the counsel acting for him in that case? a prominent lawyer, wife of the previous PM.

Trade specialists believe that the EU’s delay in leveraging immobilised state funds as collateral for its financial support package stems from concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, unaccountable authority over elected governments could be blocking the money Ukraine critically depends on.

Empty Promises and Mounting Risks

We were assured that these events were not possible. Previously, a government leader, advocating for the most significant and hazardous of all investment pacts, told us: “Britain has agreed to trade deal upon trade deal and we have never seen a problem in the past.” An expert on this matter labelled campaigners of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression was crafted to be that only poorer nations needed to fear such legal actions. Cautionary notes that “once firms grasp the authority bestowed upon them, they will shift their focus from the poorer states to the strong ones” were met with scepticism.

That prediction has now materialised. In the current period, oil and gas and extraction companies have filed a record number of suits against nations both wealthy and developing, contesting – as in the case of the Whitehaven project – official measures to prevent environmental catastrophe. Corporations have thus far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have obtained $84bn. That represents the combined GDP