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How do you understand our democratic process functions? It could be similar to this. Citizens choose MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Statutes are enforced by the courts. That's it. Well, that was how it used to work. Those days are over.

The Emergence of Shadow Tribunals

Today, international firms, and the billionaires that control them, have the power to sue governments for the regulations they pass, at offshore tribunals staffed by corporate lawyers. These proceedings take place behind closed doors. Unlike our courts, these panels grant no avenue for appeal or oversight by judges. Ordinary citizens cannot take a case to them, and neither can our government, or even companies headquartered in this country. They are open solely for corporations operating from foreign soil.

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

This compensation are based not on actual losses but compensation the tribunal officials decide the company would perhaps have made. The government may have to abandon its policy. It will be hesitant to enacting future policies along the same lines, for fear of being sued.

A Process Growing Exponentially

Historically high figures of cases are being initiated, as corporations observe each other, and private equity bankroll lawsuits in exchange for a cut of the settlements. The consequence? National sovereignty and popular rule are now prohibitively expensive.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The reason it is permitted to trump national legislation and the choices enacted by legislatures is that this provision has been written – absent public approval, and frequently under an atmosphere of extreme secrecy – into bilateral investment treaties.

A Specific Instance: The UK Coal Mine

A year ago, activists won a great victory at the high court. The presiding officer ruled that proposals to excavate the first deep coalmine in the UK for 30 years, in northwest England, were wrongly permitted by the previous government, which had endorsed the bizarre claim that the mine could have zero effect on our carbon budgets. The Labour government later cancelled the licence the former government had issued. Today, this victory is under threat by an offshore tribunal reporting to exclusively the corporations petitioning it.

In August, a firm whose ultimate owners reside in the Cayman Islands lodged a claim against the UK government. Last week a dispute settlement body in the US capital was convened to consider the case.

The company is suing the UK for the revenue it would have generated if the mine had received permission to commence operations. We have no clear indication how much this sum represents. Which individual is serving as its counsel in opposition to the British government? A sitting MP, and previous senior legal advisor in the previous government, that great patriot Sir Geoffrey Cox. The administration passes a law, the high court supports it, then a overseas corporation disputes it through an unaccountable arbitration panel, and a elected official works for its behalf.

An Oligarch's Case

Simultaneously that the tribunal on the coalmine case was appointed, it was revealed from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. Details are nothing of the case at present, but it is highly possible that he will utilise the tribunal to contest the sanctions the UK enacted against him following the invasion of Ukraine. He has started suing a small nation with similar intent, demanding sixteen billion dollars: equivalent to half of state's annual revenue. Included in the legal team on his side? Cherie Blair, spouse of the ex-UK leader.

Trade specialists argue that the EU’s procrastination in leveraging immobilised state funds as guarantee for its loan to Ukraine stems from apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a bilateral investment treaty. This unprecedented, undemocratic power over elected governments might be preventing the funds Ukraine critically depends on.

Empty Promises and Escalating Risks

We were assured that such things were not possible. Previously, a former prime minister, promoting the biggest and most dangerous of all such treaties, stated: “The UK has signed trade agreement after trade deal and we have never seen a problem in the past.” An adviser on this issue accused critics of “alarmism … the fact is, ISDS does not affect the UK much”. The general impression appeared to be that solely developing countries should be concerned by such legal actions. Warnings that “when companies start to realise the power they now possess, they will shift their focus from the vulnerable countries to the developed economies” were met with scepticism.

That threat is now a reality. In the current period, fossil fuel and mining firms have initiated a record number of claims against nations both wealthy and developing, opposing – as in the case of the Cumbrian coalmine – official measures to stop global warming. Companies have so far won $114bn by using ISDS, of which oil majors have been awarded the majority. That equates to the combined GDP