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Can you understand our democratic process functions? Perhaps similar to this. We elect MPs. They vote on bills. If a majority is achieved, the bills pass into law. Statutes are enforced by the courts. That's it. However, that used to be how it used to work. Not anymore.

The Emergence of Offshore Courts

Today, overseas companies, along with the oligarchs behind them, have the power to sue governments for the regulations they pass, at offshore tribunals staffed by business advocates. Such disputes are held away from public scrutiny. Differing from national judiciaries, these bodies grant no opportunity to appeal or judicial review. You or I are barred from bringing a case to them, and neither can our government, including businesses operating from this country. The door is open solely for corporations based overseas.

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

These sums are based not on real financial harm but money the panel members determine the company would perhaps have made. The state may have to rescind the measure. It becomes deterred from introducing similar legislation in that area, worried about facing litigation.

A Mechanism Growing Exponentially

Unprecedented levels of disputes are being filed, as companies learn from each other, and hedge funds finance suits in exchange for a portion of the awards. The outcome? Sovereignty and popular rule are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it can supersede a country's own laws and the rulings enacted by parliaments is that this clause has been inserted – without public consent, and frequently under a climate of total confidentiality – inside international trade agreements.

A Concrete Case: The UK Coalmine

Last year, environmental campaigners secured a significant win at the High Court. The justice found that plans to dig the first deep coalmine in the UK for 30 years, at Whitehaven in Cumbria, were found to be illegally sanctioned by the previous government, which had agreed to the questionable argument that the mine would have had no impact on our carbon budgets. The Labour government later cancelled the consent the previous administration had approved. Today, this legal outcome faces being overturned by an foreign court answering to no one but the entities filing the suit.

During August, a company whose final controllers are located in the tax haven filed a lawsuit challenging the UK government. Last week a dispute settlement body in Washington DC was convened to adjudicate on it.

The claimant is seeking compensation from the UK for the money it could have earned if the mine had received permission to proceed. We have little idea how much this might be. What legal team is serving as its counsel challenging the British government? A member of parliament, and previous senior legal advisor in the outgoing administration, the self-proclaimed patriot Sir Geoffrey Cox. The administration makes a decision, the domestic court validates it, then a international entity challenges it through an unaccountable private court, and a member of our parliament acts on its behalf.

The Russian Challenge

On the same day that the court on the mining lawsuit was appointed, information emerged from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian oligarch, an oligarch. We know little of the case to date, but it seems likely that he may employ the ISDS mechanism to challenge the sanctions the UK imposed on him after the war in Ukraine. He has previously initiated proceedings against Luxembourg with similar intent, claiming $16bn: half that state's yearly budget. Among the legal team acting for him in that case? Cherie Blair, married to the ex-UK leader.

Trade specialists contend that the EU’s hesitation in utilising seized oligarchs' funds as security for its financial support package is due to concerns within Belgium that it could be sued in the ISDS tribunals, under a bilateral investment treaty. This extraordinary, undemocratic power over democratic administrations might be preventing the money Ukraine urgently requires.

Empty Promises and Mounting Threats

Politicians promised that such things were not possible. In 2014, a former prime minister, championing the biggest and most dangerous of all such treaties, stated: “The UK has signed trade agreement upon trade deal and there has never been a problem in the past.” An adviser on this matter described campaigners of “exaggeration … the truth is, ISDS has little impact on the UK much”. The overall message was crafted to be that only poorer nations should be concerned by such legal actions. Warnings that “once firms grasp the influence they’ve been granted, they will turn their attention from the poorer states to the developed economies” were greeted by general mockery.

That warning is now a reality. In the current period, fossil fuel and extraction companies have filed a historic level of cases against nations both wealthy and developing, challenging – like the example of the Whitehaven project – state efforts to halt environmental catastrophe. Firms have thus far won one hundred and fourteen billion dollars through ISDS, of which energy giants have obtained $84bn. That represents the combined GDP