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Can you reckon our democratic process works? It could be similar to this. The public votes for MPs. They legislate on bills. Should a majority is secured, the bills become law. Statutes is upheld by the courts. That's it. Yet, that used to be how it once functioned. Those days are over.

The Rise of Offshore Courts

In the modern era, international firms, along with the oligarchs that control them, can sue nation states for the laws they pass, at secret arbitration panels staffed by business advocates. Such disputes are held in secret. Differing from national judiciaries, these panels provide no opportunity to appeal or oversight by judges. The general public cannot take a case to them, nor can our government, or even enterprises based in this country. Access is granted solely for businesses registered abroad.

When a secret court rules that a law or policy may compromise the corporation’s anticipated profits, it can award compensation of vast sums, potentially billions.

These awards constitute not real financial harm but funds the arbitrators decide the company would perhaps have made. The state could be forced to drop the legislation. It is hesitant to enacting future policies in that area, for fear of being sued.

A Mechanism Running Rampant

Historically high figures of cases are being filed, as companies take cues from each other, and private equity fund legal actions in return for a share of the takings. The result? National sovereignty and democratic governance are becoming prohibitively expensive.

The system is referred to as “investor-state dispute settlement” (ISDS). The reason it is allowed to override a country's own laws and the decisions enacted by parliaments is that this stipulation has been inserted – without public consent, and typically amid an atmosphere of extreme secrecy – inside trade treaties.

A Concrete Case: The Whitehaven Coal Mine

A year ago, environmental campaigners secured a significant win at the high court. The justice determined that proposals to open the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, had been wrongly permitted by the Conservative government, which had agreed to the questionable argument that the mine would have zero effect on our carbon budgets. The incoming administration then withdrew the permission the former government had issued. Currently, this success is under threat by an secret arbitration panel accountable to only the corporations petitioning it.

In August, a firm whose beneficial owners are based in the offshore financial centre filed a lawsuit against the UK government. Recently a tribunal in the United States was set up to hear it.

The company is suing the UK for the profits it would have generated if the mine had been permitted to go ahead. We have little idea how much this could amount to. What legal team is acting on its behalf challenging the state? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot the MP. The government passes a law, the high court upholds it, then a foreign company disputes it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

An Oligarch's Lawsuit

On the same day that the tribunal on the coalmine case was convened, information emerged from a government response that the UK is also being sued under ISDS by a Russian oligarch, a sanctioned individual. We know scarce of the case to date, but it seems likely that he will utilise the tribunal to challenge the restrictions the UK imposed on him subsequent to the Russian aggression. He has already filed a claim against a small nation on these grounds, claiming a colossal sum: equivalent to half of state's yearly income. Included in the lawyers acting for him in that case? Cherie Blair, spouse of the former British prime minister.

International law scholars believe that the EU’s delay in leveraging immobilised state funds as collateral for its financial support package stems from concerns within Belgium that it could be taken to court in the secret arbitration panels, under a investment pact. This extraordinary, unaccountable authority over elected governments could be blocking the funds Ukraine urgently requires.

False Assurances and Escalating Costs

We were assured that such things wouldn’t happen. In 2014, a senior politician, championing the largest and riskiest of all these agreements, declared: “The UK has signed investment treaty upon trade deal and there has never been a case in the past.” An expert on this issue described activists of “alarmism … the truth is, ISDS barely touches the UK much”. The prevailing narrative was crafted to be that exclusively weaker states needed to fear such legal actions. Cautionary notes that “once firms grasp the authority they now possess, they will shift their focus from the vulnerable countries to the wealthy nations” were met with general mockery.

That prediction has come to pass. Recently, oil and gas and extraction companies have filed a record number of cases against nations rich and poor, contesting – similar to the Cumbrian coalmine – state efforts to stop global warming. Corporations have so far won vast sums by using ISDS, of which oil majors have secured eighty-four billion dollars. That represents the combined GDP