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Can you understand our democratic process operates? It could be similar to this. Citizens choose MPs. They vote on bills. Should a majority is secured, the bills are enacted as law. Legislation is upheld by the courts. That's it. However, that’s how it once functioned. Those days are over.

The Emergence of Shadow Courts

Today, international firms, along with the billionaires who own them, have the power to sue governments for the policies they pass, at offshore tribunals staffed by commercial attorneys. These proceedings are held behind closed doors. In contrast to domestic courts, these bodies provide no opportunity to appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, just as our government, including companies headquartered in this country. Access is granted solely for businesses based overseas.

Should an arbitration panel rules that a legislative action could harm the corporation’s expected profits, it may order compensation of hundreds of millions of pounds, running into billions.

These sums constitute not tangible damages but funds the tribunal officials determine the company could potentially have made. The state might be compelled to abandon its policy. It is hesitant to passing future laws in that area, worried about being sued.

A System Running Rampant

Historically high figures of legal actions are being filed, as companies take cues from each other, and investment funds finance suits in return for a portion of the takings. The result? National sovereignty and popular rule are becoming prohibitively expensive.

The system is known as “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede national legislation and the rulings taken by legislatures is that this provision has been incorporated – absent public approval, and typically amid an atmosphere of profound opacity – into bilateral investment treaties.

A Real-World Instance: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners secured a significant win at the High Court. The judge ruled that schemes to open the first new deep coal mine in the UK for three decades, in northwest England, were unlawfully approved by the Conservative government, which had endorsed the questionable argument that the mine would have had no impact on national carbon targets. The Labour government then withdrew the permission the previous administration had issued. Today, this success faces being overturned by an offshore tribunal accountable to no one but the companies bringing the case.

During August, a firm whose beneficial owners are located in the Cayman Islands lodged a claim against the UK government. Recently a tribunal in Washington DC was convened to adjudicate on it.

This firm is suing the UK for the revenue it could have earned if the mine had been allowed to go ahead. The public has no idea how much this might be. Which individual is representing it against the British government? An elected representative, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The state enacts a policy, the high court validates it, then a overseas corporation challenges it through an undemocratic offshore tribunal, and a sitting MP works for its behalf.

An Oligarch's Challenge

On the same day that the tribunal on the mining lawsuit was established, it was revealed from a ministerial statement that the UK is subject to further litigation under ISDS by a Russian oligarch, a sanctioned individual. The public knows scarce of the case at present, but it is highly possible that he’ll use the arbitration process to contest the sanctions the UK imposed on him subsequent to the war in Ukraine. He has previously filed a claim against another European state on these grounds, seeking a colossal sum: equivalent to half of state's yearly income. Among the counsel representing him there? Cherie Blair, wife of the ex-UK leader.

International law scholars contend that the EU’s procrastination in leveraging immobilised state funds as collateral for its loan to Ukraine is due to concerns within Belgium that it could be subject to litigation in the offshore corporate courts, under a trade agreement. This unprecedented, undemocratic power over elected governments could be blocking the money Ukraine critically depends on.

Misleading Claims and Growing Threats

Politicians promised that these events wouldn’t happen. In 2014, a senior politician, promoting the biggest and most dangerous of all such treaties, stated: “We’ve signed trade deal upon trade deal and there has never been a problem in the past.” An adviser on this topic described critics of “alarmism … the fact is, ISDS does not affect the UK much”. The overall message appeared to be that solely developing countries had to worry about these lawsuits. Warnings that “as corporations begin to understand the authority they’ve been granted, they will shift their focus from the vulnerable countries to the wealthy nations” were greeted by scepticism.

That warning is now a reality. In the current period, oil and gas and mining firms have initiated a historic level of suits against nations both wealthy and developing, challenging – like the example of the Whitehaven project – government attempts to halt climate breakdown. Corporations have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have obtained eighty-four billion dollars. That is equivalent to the combined GDP