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Can you understand our democratic process works? Maybe similar to this. We elect MPs. They vote on bills. When a majority is obtained, the bills are enacted as law. Statutes is upheld by the courts. End of story. Yet, that used to be how it operated in the past. Those days are over.

The Advent of Offshore Tribunals

Today, overseas companies, along with the billionaires that control them, are able to litigate against nation states for the policies they pass, at private courts staffed by business advocates. The cases are conducted behind closed doors. In contrast to domestic courts, these panels grant no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, nor can our government, or even enterprises headquartered in this country. The door is open only to entities operating from foreign soil.

If a tribunal rules that a law or policy could harm the corporation’s projected profits, it has the power to grant compensation of hundreds of millions of pounds, even billions.

This compensation constitute not real financial harm but compensation the tribunal officials decide the company could potentially have made. The state may have to drop the legislation. It becomes deterred from passing future laws along the same lines, for fear of being sued.

A Mechanism Running Rampant

Record numbers of cases are being filed, as firms learn from each other, and investment funds fund legal actions in exchange for a portion of the takings. The result? Sovereignty and democracy are now too costly.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it can supersede national legislation and the rulings made by parliaments is that this clause has been incorporated – without democratic mandate, and often in conditions of profound opacity – within bilateral investment treaties.

A Concrete Example: The Cumbrian Coal Mine

Last year, activists secured a significant win at the high court. The justice found that plans to excavate the first deep coalmine in the UK for a generation, at Whitehaven in Cumbria, were wrongly permitted by the previous government, which had agreed to the bizarre claim that the mine would have zero effect on our carbon budgets. The new government then withdrew the licence the Tories had granted. Currently, this legal outcome could be compromised by an offshore tribunal answering to no one but the corporations petitioning it.

Last August, a firm whose beneficial owners are located in the Cayman Islands initiated proceedings challenging the UK government. Recently a dispute settlement body in Washington DC was convened to hear it.

The claimant is seeking compensation from the UK for the revenue it might have made if the mine had been permitted to proceed. The public has no idea how much this sum represents. Who is acting on its behalf challenging the British government? An elected representative, and former attorney-general in the Conservative government, the noted patriot Geoffrey Cox. The government enacts a policy, the domestic court supports it, then a overseas corporation contests it through an undemocratic offshore tribunal, and a elected official acts on its behalf.

The Russian Case

Concurrently that the panel on the coal mine dispute was convened, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. Details are scarce of the case so far, but it appears probable that he will utilise the tribunal to fight the sanctions the UK enacted against him subsequent to the war in Ukraine. He has previously started suing Luxembourg on these grounds, demanding a colossal sum: half that state's yearly income. Included in the legal team acting for him in that case? the wife of a former prime minister, wife of the former British prime minister.

Trade specialists contend that the EU’s hesitation in leveraging immobilised oligarchs' funds as collateral for its aid for Ukraine stems from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a investment pact. This unprecedented, undemocratic power over democratic administrations may be obstructing the finance Ukraine desperately needs.

Empty Promises and Growing Threats

The public was told that such things wouldn’t happen. Previously, a senior politician, advocating for the largest and riskiest of all these agreements, told us: “Britain has agreed to trade deal upon trade deal and there has never been a problem in the past.” An adviser on this matter labelled campaigners of “exaggeration … the fact is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that solely developing countries should be concerned by these lawsuits. Warnings that “as corporations start to realise the power bestowed upon them, they will redirect their efforts from the weak nations to the strong ones” were dismissed with widespread derision.

That threat has now materialised. This year, energy and mining firms have lodged a unprecedented number of suits against nations across the economic spectrum, opposing – similar to the UK mine – government attempts to stop global warming. Corporations have so far won one hundred and fourteen billion dollars by using ISDS, of which fossil fuel companies have secured the majority. That equates to the combined GDP