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What is your reckon our democratic process operates? Perhaps along the lines of this. Citizens choose MPs. They legislate on bills. When a majority is secured, the bills are enacted as law. Legislation is maintained by the courts. That's it. Well, that was how it used to work. Those days are over.

The Rise of Offshore Courts

Today, foreign corporations, or the oligarchs that control them, have the power to sue nation states for the policies they pass, at offshore tribunals staffed by commercial attorneys. Such disputes take place behind closed doors. Unlike our courts, these bodies provide no right of appeal or oversight by judges. Ordinary citizens are barred from bringing a case to them, and neither can our government, or even companies based in this country. The door is open solely for businesses operating from foreign soil.

When a secret court finds that a government measure may compromise the corporation’s anticipated profits, it may order financial penalties of vast sums, even billions.

These awards represent not tangible damages but money the arbitrators determine the company could potentially have made. The government may have to abandon its policy. It will be discouraged from enacting future policies along the same lines, for fear of incurring a lawsuit.

A Process Growing Exponentially

Historically high figures of cases are being filed, as corporations learn from each other, and private equity finance suits for a share of a portion of the takings. The result? National sovereignty and democratic governance are now prohibitively expensive.

The process is called “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the decisions taken by elected bodies is that this clause has been incorporated – without democratic mandate, and typically amid conditions of total confidentiality – inside international trade agreements.

A Specific Example: The Cumbrian Coal Mine

Twelve months ago, environmental campaigners won a great victory at the high court. The judge determined that proposals to open the first new deep coal mine in the UK for 30 years, in northwest England, were found to be unlawfully approved by the previous government, which had accepted the questionable argument that the mine would have zero effect on our carbon budgets. The new government then withdrew the consent the previous administration had issued. Now, this victory is under threat by an foreign court answering to only the entities petitioning it.

During August, a firm whose final controllers reside in the tax haven initiated proceedings challenging the UK government. Recently a arbitration panel in the United States was established to hear it.

This firm is seeking compensation from the UK for the profits it could have earned if the mine had received permission to proceed. We have no idea how much this sum represents. Which individual is representing it against the state? An elected representative, and previous senior legal advisor in the Conservative government, the noted patriot Sir Geoffrey Cox. The state makes a decision, the national judiciary upholds it, then a overseas corporation contests it through an secretive private court, and a sitting MP acts on its behalf.

The Russian Case

Concurrently that the panel on the coal mine dispute was appointed, we learned from a ministerial statement that the UK faces another lawsuit under ISDS by a Russian billionaire, a sanctioned individual. We know nothing of the case to date, but it seems likely that he’ll use the arbitration process to contest the restrictions the UK enacted against him subsequent to the Russian aggression. He has initiated proceedings against Luxembourg with similar intent, seeking $16bn: equivalent to half of nation's yearly budget. Part of the legal team acting for him in that case? a prominent lawyer, married to the former British prime minister.

Legal experts argue that the EU’s delay in utilising seized oligarchs' funds as collateral for its loan to Ukraine stems from concerns within Belgium that it could be subject to litigation in the ISDS tribunals, under a bilateral investment treaty. This remarkable, secretive influence over sovereign states could be blocking the funds Ukraine urgently requires.

Empty Promises and Mounting Threats

We were assured that these scenarios were not possible. Years ago, a senior politician, advocating for the most significant and hazardous of all these agreements, declared: “We’ve signed trade deal after trade deal and there has not been a case in the past.” An expert on this topic labelled critics of “alarmism … the fact is, ISDS has little impact on the UK much”. The general impression was crafted to be that only poorer nations had to worry about such legal actions. Warnings that “when companies begin to understand the power bestowed upon them, they will shift their focus from the poorer states to the developed economies” were greeted by scepticism.

That threat has now materialised. In the current period, oil and gas and mining firms have lodged a record number of suits against nations both wealthy and developing, opposing – similar to the Cumbrian coalmine – official measures to halt climate breakdown. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which fossil fuel companies have obtained eighty-four billion dollars. That equates to the combined GDP