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Can you understand our democratic process works? Perhaps similar to this. We elect MPs. They vote on bills. If a majority is obtained, the bills are enacted as law. Legislation are enforced by the courts. That's it. However, that was how it once functioned. Those days are over.

The Advent of Shadow Tribunals

In the modern era, foreign corporations, and the oligarchs who own them, are able to litigate against nation states for the regulations they pass, at private courts staffed by corporate lawyers. These proceedings are conducted in secret. In contrast to domestic courts, these tribunals grant no opportunity to appeal or oversight by judges. The general public cannot take a case to them, and neither can our government, or even businesses operating from this country. Access is granted only to entities based overseas.

When a secret court determines that a legislative action might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, even billions.

These sums represent not tangible damages but funds the tribunal officials determine the company might otherwise have made. The administration may have to drop the legislation. It is deterred from passing future laws in that area, worried about incurring a lawsuit.

A System Running Rampant

Record numbers of legal actions are being brought, as firms take cues from each other, and hedge funds finance suits in return for a cut of the awards. The outcome? National sovereignty and popular rule are now too costly.

The process is referred to as “investor-state dispute settlement” (ISDS). The reason it can supersede a country's own laws and the decisions taken by parliaments is that this stipulation has been incorporated – absent public approval, and typically amid an atmosphere of profound opacity – within trade treaties.

A Concrete Case: The UK Coalmine

Last year, environmental campaigners secured a significant win at the high court. The judge ruled that plans to excavate the first major coal mine in the UK for a generation, at Whitehaven in Cumbria, had been unlawfully approved 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 consent the previous administration had issued. Now, this legal outcome faces being overturned by an offshore tribunal accountable to exclusively the companies bringing the case.

Last August, a company whose beneficial owners are based in the offshore financial centre initiated proceedings against the UK government. Recently a dispute settlement body in the US capital was convened to consider the case.

The claimant is litigating against the UK for the money it might have made if the mine had received permission to commence operations. The public has little idea how much this might be. Which individual is acting on its behalf against the British government? A member of parliament, and former attorney-general in the Conservative government, the self-proclaimed patriot the MP. The administration passes a law, the domestic court validates it, then a international entity contests it through an undemocratic offshore tribunal, and a elected official represents its behalf.

An Oligarch's Lawsuit

Simultaneously that the court on the coal mine dispute was appointed, we learned from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, Mikhail Fridman. Details are nothing of the case to date, but it appears probable that he’ll use the arbitration process to contest the restrictions the UK levied against him subsequent to the invasion of Ukraine. He has previously started suing a small nation for this reason, demanding $16bn: half that nation's yearly budget. Among the legal team representing him there? Cherie Blair, married to the ex-UK leader.

Legal experts contend that the EU’s delay in leveraging immobilised Russian assets as guarantee for its loan to Ukraine stems from Belgium’s fear that it could be sued in the offshore corporate courts, under a trade agreement. This unprecedented, secretive influence over sovereign states might be preventing the finance Ukraine desperately needs.

Empty Promises and Escalating Costs

The public was told that such things could not occur. Years ago, a former prime minister, advocating for the most significant and hazardous of all such treaties, stated: “The UK has signed investment treaty upon trade deal and we have never seen a problem in the past.” An expert on this topic described critics of “scaremongering … the fact is, ISDS barely touches the UK much”. The general impression was crafted to be that solely developing countries should be concerned by these lawsuits. Cautionary notes that “when companies grasp the power they now possess, they will redirect their efforts from the vulnerable countries to the wealthy nations” were met with scepticism.

That threat has now materialised. Recently, fossil fuel and resource corporations have lodged a unprecedented number of suits against nations both wealthy and developing, contesting – similar to the UK mine – state efforts to prevent global warming. Firms have thus far won one hundred and fourteen billion dollars by using ISDS, of which oil majors have secured eighty-four billion dollars. That is equivalent to the combined GDP