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What is your perceive our democratic process functions? Maybe similar to this. The public votes for MPs. They legislate on bills. When a majority is achieved, the bills become law. Statutes is upheld by the courts. Simple as that. Well, that used to be how it once functioned. Not anymore.

The Advent of Offshore Courts

Nowadays, overseas companies, along with the oligarchs who own them, can sue nation states for the regulations they pass, at secret arbitration panels composed of commercial attorneys. The cases are held away from public scrutiny. In contrast to domestic courts, these tribunals provide no avenue for appeal or judicial review. Ordinary citizens are unable to file a case to them, nor can our government, or even enterprises headquartered in this country. They are open exclusively to corporations registered abroad.

Should an arbitration panel finds that a legislative action may compromise the corporation’s projected profits, it has the power to grant damages of hundreds of millions, running into billions.

This compensation are based not on real financial harm but funds the tribunal officials conclude the company could potentially have made. The state might be compelled to drop the legislation. It is discouraged from passing future laws in that area, worried about facing litigation.

A Mechanism Spiralling Out of Control

Historically high figures of legal actions are being initiated, as corporations learn from each other, and investment funds finance suits for a share of a share of the awards. The result? Democratic sovereignty and democratic governance are now prohibitively expensive.

This mechanism is known as “investor-state dispute settlement” (ISDS). The reason it can supersede domestic law and the rulings enacted by parliaments is that this clause has been written – without democratic mandate, and often in conditions of total confidentiality – inside international trade agreements.

A Concrete Instance: The Whitehaven Coal Mine

Twelve months ago, environmental campaigners won a great victory at the high court. The presiding officer ruled that plans to excavate the first deep coalmine in the UK for a generation, in Cumbria, had been unlawfully approved by the outgoing administration, which had accepted the questionable argument that the mine would have no consequence on climate commitments. The new government subsequently revoked the permission the former government had issued. Currently, this success faces being overturned by an secret arbitration panel accountable to no one but the entities petitioning it.

In August, a corporate entity whose ultimate owners are based in the Cayman Islands lodged a claim versus the UK government. The previous week a dispute settlement body in the US capital was set up to consider the case.

The company is seeking compensation from the UK for the profits it could have earned if the mine had been permitted to go ahead. Citizens have little idea how much this could amount to. What legal team is serving as its counsel against the state? An elected representative, and previous senior legal advisor in the outgoing administration, that great patriot the MP. The state passes a law, the high court validates it, then a international entity disputes it through an secretive private court, and a member of our parliament acts on its behalf.

An Oligarch's Case

Simultaneously that the court on the mining lawsuit was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a Russian billionaire, a sanctioned individual. The public knows scarce of the case to date, but it appears probable that he may employ the arbitration process to fight the restrictions the UK levied against him after the Russian aggression. He has already initiated proceedings against Luxembourg on these grounds, demanding sixteen billion dollars: equivalent to half of nation's yearly income. Included in the lawyers acting for him in that case? Cherie Blair, wife of the former British prime minister.

Legal experts believe that the EU’s hesitation in leveraging immobilised oligarchs' funds as security for its financial support package arises from Belgium’s fear that it could be subject to litigation in the secret arbitration panels, under a trade agreement. This unprecedented, unaccountable authority over sovereign states may be obstructing the money Ukraine desperately needs.

False Assurances and Growing Threats

The public was told that these scenarios could not occur. In 2014, a senior politician, championing the biggest and most dangerous of all such treaties, stated: “We’ve signed investment treaty after trade deal and there has not been a case in the past.” A consultant on this issue accused critics of “exaggeration … in reality, ISDS does not affect the UK much”. The prevailing narrative seemed to be that only poorer nations needed to fear ISDS claims. Cautionary notes that “when companies grasp the influence they now possess, they will shift their focus from the vulnerable countries to the strong ones” were dismissed with scepticism.

That threat has come to pass. Recently, fossil fuel and resource corporations have lodged a record number of suits against nations rich and poor, challenging – like the example of the UK mine – official measures to prevent global warming. Corporations have so far won one hundred and fourteen billion dollars via ISDS, of which energy giants have been awarded $84bn. That represents the combined GDP