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What is your perceive our democratic process functions? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. Should a majority is achieved, the bills become law. Statutes are enforced by the courts. Simple as that. However, that used to be how it operated in the past. No longer.

The Advent of Offshore Courts

Nowadays, overseas companies, along with the oligarchs behind them, can sue nation states for the policies they pass, at private courts made up of business advocates. These proceedings are held away from public scrutiny. Unlike our courts, these panels grant no opportunity to appeal or oversight by judges. You or I are barred from bringing a case to them, nor can our government, or even companies based in this country. They are open solely for businesses based overseas.

If a tribunal finds that a legislative action might diminish the corporation’s projected profits, it can award damages of hundreds of millions of pounds, potentially billions.

These awards are based not on tangible damages but compensation the arbitrators determine the company could potentially have made. The state might be compelled to rescind the measure. It will be deterred from introducing similar legislation of a similar nature, for fear of being sued.

A System Spiralling Out of Control

Historically high figures of cases are being brought, as corporations observe each other, and private equity finance suits for a share of a share of the awards. The consequence? National sovereignty and popular rule are turning into unaffordable.

The system is known as “investor-state dispute settlement” (ISDS). The explanation it is allowed to override national legislation and the decisions enacted by parliaments is that this provision has been written – absent public approval, and frequently under a climate of profound opacity – within international trade agreements.

A Specific Example: The Whitehaven Coal Mine

A year ago, environmental campaigners achieved a major legal triumph at the senior court. The presiding officer determined that proposals to dig the first major coal mine in the UK for three decades, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had agreed to the extraordinary assertion that the mine would have no consequence on our carbon budgets. The new government subsequently revoked the permission the previous administration had issued. Today, this victory could be compromised by an foreign court reporting to no one but the corporations filing the suit.

In August, a firm whose final controllers are based in the offshore financial centre filed a lawsuit against the UK government. Recently a tribunal in the US capital was convened to hear it.

The company is litigating against the UK for the revenue it would have generated if the mine had been allowed to go ahead. We have no clear indication how much this might be. Who is acting on its behalf challenging the British government? An elected representative, and former attorney-general in the previous government, that great patriot Sir Geoffrey Cox. The state enacts a policy, the domestic court upholds it, then a overseas corporation contests it through an secretive offshore tribunal, and a member of our parliament works for its behalf.

A Sanctions Lawsuit

Concurrently that the panel on the mining lawsuit was convened, it was revealed from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian oligarch, a sanctioned individual. Details are little of the case to date, but it appears probable that he’ll use the tribunal to contest the sanctions the UK levied against him following the war in Ukraine. He has filed a claim against a small nation for this reason, demanding sixteen billion dollars: half that state's annual revenue. Part of the lawyers representing him there? a prominent lawyer, married to the former British prime minister.

Legal experts contend that the EU’s delay 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 ISDS tribunals, under a bilateral investment treaty. This extraordinary, unaccountable authority over sovereign states could be blocking the finance Ukraine critically depends on.

Misleading Claims and Mounting Threats

Politicians promised that such things were not possible. In 2014, a former prime minister, championing the most significant and hazardous of all these agreements, told us: “Britain has agreed to trade deal after trade deal and there has never been a problem in the past.” An adviser on this matter labelled campaigners of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression seemed to be that solely developing countries needed to fear these lawsuits. Predictions that “as corporations start to realise the authority they’ve been granted, they will redirect their efforts from the poorer states to the strong ones” were met with widespread derision.

That prediction has now materialised. This year, energy and mining firms have initiated a unprecedented number of cases against nations across the economic spectrum, challenging – like the example of the UK mine – state efforts to prevent climate breakdown. Companies have so far won $114bn by using ISDS, of which fossil fuel companies have secured $84bn. That equates to the combined GDP