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Can you reckon our democratic process functions? Maybe along the lines of this. Citizens choose MPs. They vote on bills. When a majority is secured, the bills become law. The law is upheld by the courts. End of story. Well, that was how it once functioned. No longer.

The Rise of Offshore Tribunals

Nowadays, international firms, along with the oligarchs that control them, have the power to sue governments for the policies they pass, at private courts composed of corporate lawyers. The cases take place behind closed doors. Unlike our courts, these bodies allow no opportunity to appeal or legal review. The general public are unable to file a case to them, just as our government, or even enterprises based in this country. The door is open exclusively to entities based overseas.

When a secret court determines that a law or policy may compromise the corporation’s anticipated profits, it can award damages of vast sums, potentially billions.

These sums constitute not actual losses but compensation the arbitrators decide the company would perhaps have made. The government could be forced to rescind the measure. It will be deterred from passing future laws in that area, due to the risk of being sued.

A Process Running Rampant

Unprecedented levels of legal actions are being filed, as firms observe each other, and investment funds finance suits in return for a cut of the awards. The result? National sovereignty and popular rule are becoming too costly.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to trump domestic law and the choices taken by elected bodies is that this stipulation has been inserted – without public consent, and often in a climate of extreme secrecy – into bilateral investment treaties.

A Concrete Instance: The Whitehaven Coal Mine

A year ago, activists won a great victory at the high court. The presiding officer found that proposals to excavate the first new deep coal mine in the UK for three decades, in Cumbria, were found to be illegally sanctioned by the Conservative government, which had endorsed the bizarre claim that the mine could have no impact on climate commitments. The Labour government then withdrew the permission the previous administration had issued. Today, this victory could be compromised by an secret arbitration panel answering to exclusively the entities filing the suit.

During August, a company whose beneficial owners are located in the Cayman Islands filed a lawsuit challenging the UK government. The previous week a arbitration panel in Washington DC was established to adjudicate on it.

The claimant is suing the UK for the profits it might have made if the mine had received permission to proceed. We have no idea how much this sum represents. Which individual is acting on its behalf in opposition to the UK administration? A sitting MP, and former attorney-general in the outgoing administration, the noted patriot the MP. The government enacts a policy, the high court validates it, then a foreign company challenges it through an undemocratic private court, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

Concurrently that the court on the coalmine case was convened, it was revealed from a government response that the UK faces another lawsuit under ISDS by a Russian billionaire, Mikhail Fridman. Details are little of the case to date, but it is highly possible that he will utilise the tribunal to contest the sanctions the UK imposed on him after the Russian aggression. He has already started suing Luxembourg on these grounds, claiming $16bn: half that nation's annual revenue. Included in the legal team acting for him in that case? the wife of a former prime minister, married to the previous PM.

Trade specialists believe that the EU’s delay in leveraging immobilised Russian assets as guarantee for its loan to Ukraine is due to Belgium’s fear that it could be subject to litigation in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over democratic administrations could be blocking the money Ukraine desperately needs.

Misleading Claims and Escalating Threats

The public was told that these events were not possible. Years ago, a former prime minister, promoting the biggest and most dangerous of all investment pacts, told us: “The UK has signed trade deal upon trade deal and there has not been a case in the past.” A consultant on this matter accused activists of “exaggeration … the truth is, ISDS has little impact on the UK much”. The prevailing narrative was crafted to be that only poorer nations needed to fear ISDS claims. Predictions that “when companies start to realise the influence bestowed upon them, they will turn their attention from the weak nations to the strong ones” were dismissed with widespread derision.

That warning has now materialised. Recently, oil and gas and mining firms have filed a historic level of suits against nations across the economic spectrum, opposing – as in the case of the Cumbrian coalmine – state efforts to halt environmental catastrophe. Firms have to date won vast sums through ISDS, of which fossil fuel companies have secured $84bn. That equates to the combined GDP