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What is your perceive our democratic process functions? Perhaps something like this. The public votes for MPs. They legislate on bills. Should a majority is achieved, the bills pass into law. The law is maintained by the courts. End of story. Yet, that’s how it used to work. No longer.

The Rise of Offshore Tribunals

Today, international firms, and the oligarchs that control them, can sue elected administrations for the laws they pass, at offshore tribunals staffed by corporate lawyers. The cases take place away from public scrutiny. In contrast to domestic courts, these tribunals provide no opportunity to appeal or oversight by judges. The general public are barred from bringing a case to them, and neither can our government, or even enterprises headquartered in this country. Access is granted solely for businesses operating from foreign soil.

Should an arbitration panel finds that a legislative action may compromise the corporation’s projected profits, it can award financial penalties of vast sums, potentially billions.

These sums represent not actual losses but compensation the tribunal officials conclude the company could potentially have made. The state could be forced to abandon its policy. It will be discouraged from introducing similar legislation along the same lines, for fear of facing litigation.

A Process Growing Exponentially

Historically high figures of legal actions are being brought, as companies take cues from each other, and private equity bankroll lawsuits in exchange for a portion of the settlements. The result? Democratic sovereignty and democratic governance are turning into unaffordable.

The system is referred to as “investor-state dispute settlement” (ISDS). The rationale it is allowed to trump a country's own laws and the decisions enacted by elected bodies is that this clause has been incorporated – without democratic mandate, and frequently under a climate of total confidentiality – into bilateral investment treaties.

A Real-World Instance: The UK Coal Mine

Last year, a conservation group secured a significant win at the high court. The judge determined that plans 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 outgoing administration, which had endorsed the questionable argument that the mine would have no consequence on climate commitments. The new government then withdrew the consent the previous administration had issued. Today, this success faces being overturned by an secret arbitration panel answering to only the corporations filing the suit.

Last August, a company whose ultimate owners are located in the tax haven lodged a claim challenging the UK government. Last week a dispute settlement body in the US capital was set up to hear it.

This firm is litigating against the UK for the profits it could have earned if the mine had received permission to go ahead. We have little idea how much this might be. Who is acting on its behalf against the state? A sitting MP, and former attorney-general in the Conservative government, the self-proclaimed patriot Sir Geoffrey Cox. The administration passes a law, the national judiciary validates it, then a foreign company disputes it through an undemocratic offshore tribunal, and a sitting MP acts on its behalf.

An Oligarch's Case

On the same day that the tribunal on the coalmine case was established, we learned from a government response that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know scarce of the case to date, but it appears probable that he may employ the tribunal to challenge the restrictions the UK imposed on him after the invasion of Ukraine. He has previously started suing a small nation on these grounds, demanding sixteen billion dollars: an amount representing half state's yearly income. Part of the lawyers on his side? a prominent lawyer, married to the ex-UK leader.

Legal experts contend that the EU’s hesitation in utilising seized state funds as security for its financial support package stems from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a bilateral investment treaty. This unprecedented, undemocratic power over democratic administrations might be preventing the money Ukraine desperately needs.

Empty Promises and Escalating Threats

The public was told that these events were not possible. In 2014, a government leader, championing the largest and riskiest of all such treaties, declared: “The UK has signed investment treaty upon trade deal and we have never seen a issue in the past.” A consultant on this issue labelled activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states should be concerned by these lawsuits. Cautionary notes that “once firms start to realise the influence they’ve been granted, they will turn their attention from the poorer states to the wealthy nations” were met with general mockery.

That threat has come to pass. In the current period, fossil fuel and mining firms have lodged a unprecedented number of claims against nations across the economic spectrum, challenging – like the example of the Whitehaven project – government attempts to stop climate breakdown. Corporations have to date won one hundred and fourteen billion dollars via ISDS, of which energy giants have secured $84bn. That equates to the combined GDP