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Can you perceive our democratic process works? It could be along the lines of this. We elect MPs. They vote on bills. When a majority is secured, the bills pass into law. The law are enforced by the courts. That's it. However, that’s how it once functioned. Not anymore.

The Emergence of Offshore Courts

In the modern era, international firms, and the billionaires that control them, are able to litigate against elected administrations for the policies they pass, at private courts staffed by commercial attorneys. The cases are conducted in secret. In contrast to domestic courts, these tribunals grant no avenue for appeal or judicial review. The general public are barred from bringing a case to them, and neither can our government, including businesses operating from this country. Access is granted only to entities operating from foreign soil.

If a tribunal determines that a law or policy might diminish the corporation’s expected profits, it has the power to grant financial penalties of hundreds of millions, even billions.

This compensation constitute not tangible damages but compensation the tribunal officials conclude the company would perhaps have made. The government could be forced to abandon its policy. It becomes discouraged from enacting future policies along the same lines, worried about being sued.

A Mechanism Running Rampant

Record numbers of disputes are being initiated, as firms learn from each other, and hedge funds fund legal actions for a share of a cut of the takings. The result? Sovereignty and democratic governance are now unaffordable.

The system is called “investor-state dispute settlement” (ISDS). The rationale it is permitted to supersede a country's own laws and the decisions taken by legislatures is that this stipulation has been written – without democratic mandate, and often in a climate of profound opacity – within international trade agreements.

A Real-World Case: The Whitehaven Coal Mine

Twelve months ago, a conservation group secured a significant win at the high court. The justice found that schemes to dig the first major coal mine in the UK for three decades, in northwest England, were found to be unlawfully approved by the outgoing administration, which had endorsed the bizarre claim that the mine would have had no consequence on our carbon budgets. The Labour government later cancelled the consent the previous administration had approved. Currently, this success is under threat by an secret arbitration panel answering to only the companies bringing the case.

During August, a company whose beneficial owners reside in the tax haven initiated proceedings versus the UK government. Recently a dispute settlement body in the United States was established to consider the case.

This firm is litigating against the UK for the revenue it might have made 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 outgoing administration, that great patriot Sir Geoffrey Cox. The government enacts a policy, the national judiciary validates it, then a overseas corporation challenges it through an secretive private court, and a sitting MP acts on its behalf.

An Oligarch's Challenge

Simultaneously that the court on the coalmine case was convened, we learned from a parliamentary answer that the UK is subject to further litigation under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are nothing of the case so far, but it appears probable that he may employ the tribunal to challenge the penalties the UK levied against him following the war in Ukraine. He has previously started suing Luxembourg with similar intent, seeking $16bn: equivalent to half of state's yearly budget. Included in the legal team representing him there? Cherie Blair, wife of the former British prime minister.

International law scholars argue that the EU’s delay in utilising seized Russian assets as security for its financial support package arises from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a trade agreement. This extraordinary, unaccountable authority over democratic administrations could be blocking the finance Ukraine critically depends on.

False Assurances and Escalating Risks

Politicians promised that these events wouldn’t happen. In 2014, a senior politician, championing the largest and riskiest of all such treaties, stated: “We’ve signed trade deal after trade deal and we have never seen a case in the past.” A consultant on this matter labelled campaigners of “scaremongering … the truth is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that only poorer nations had to worry about ISDS claims. Cautionary notes that “once firms start to realise the influence they now possess, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with general mockery.

That warning has now materialised. Recently, fossil fuel and extraction companies have lodged a unprecedented number of suits against nations both wealthy and developing, contesting – as in the case of the Cumbrian coalmine – official measures to stop environmental catastrophe. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which energy giants have been awarded eighty-four billion dollars. That represents the combined GDP