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Can you reckon our democratic process operates? It could be something like this. Citizens choose MPs. They legislate on bills. If a majority is obtained, the bills become law. Statutes is upheld by the courts. That's it. However, that was how it once functioned. Not anymore.

The Emergence of Shadow Tribunals

Nowadays, overseas companies, and the oligarchs that control them, are able to litigate against nation states for the policies they pass, at private courts made up of corporate lawyers. These proceedings are held away from public scrutiny. Unlike our courts, these bodies provide no opportunity to appeal or oversight by judges. You or I cannot take a case to them, and neither can our government, or even companies headquartered in this country. The door is open solely for entities operating from foreign soil.

If a tribunal rules that a law or policy may compromise the corporation’s expected profits, it can award damages of vast sums, running into billions.

These sums constitute not actual losses but money the tribunal officials decide the company would perhaps have made. The state may have to drop the legislation. It becomes hesitant to introducing similar legislation of a similar nature, due to the risk of facing litigation.

A System Running Rampant

Historically high figures of disputes are being filed, as firms learn from each other, and investment funds bankroll lawsuits in return for a share of the settlements. The result? Democratic sovereignty and democracy are becoming unaffordable.

The process is referred to as “investor-state dispute settlement” (ISDS). The rationale it can override national legislation and the decisions made by parliaments is that this provision has been incorporated – without democratic mandate, and often in an atmosphere of total confidentiality – into international trade agreements.

A Concrete Example: The UK Coal Mine

Twelve months ago, activists secured a significant win at the High Court. The judge ruled that plans to open the first new deep coal mine in the UK for a generation, in northwest England, were found to be illegally sanctioned by the outgoing administration, which had agreed to the extraordinary assertion that the mine would have no consequence on our carbon budgets. The incoming administration subsequently revoked the consent the former government had approved. Now, this legal outcome faces being overturned by an foreign court answering to no one but the companies bringing the case.

In August, a firm whose final controllers are based in the offshore financial centre lodged a claim versus the UK government. The previous week a dispute settlement body in Washington DC was set up to consider the case.

This firm is seeking compensation from the UK for the revenue it could have earned if the mine had received permission to commence operations. The public has no clear indication how much this could amount to. Which individual is acting on its behalf against the British government? An elected representative, and ex-law officer in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the high court upholds it, then a international entity contests it through an unaccountable private court, and a elected official represents its behalf.

An Oligarch's Case

Simultaneously that the tribunal on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK faces another lawsuit under ISDS by a Russian billionaire, an oligarch. Details are little of the case so far, but it appears probable that he will utilise the ISDS mechanism to fight the penalties the UK imposed on him subsequent to the war in Ukraine. He has initiated proceedings against a small nation for this reason, seeking sixteen billion dollars: an amount representing half nation's annual revenue. Among the lawyers representing him there? a prominent lawyer, married to the previous PM.

International law scholars contend that the EU’s hesitation in using frozen oligarchs' funds as guarantee for its aid for Ukraine is due to apprehension in Brussels that it could be taken to court in the offshore corporate courts, under a investment pact. This extraordinary, unaccountable authority over sovereign states could be blocking the finance Ukraine urgently requires.

Misleading Claims and Escalating Risks

Politicians promised that such things could not occur. In 2014, a senior politician, promoting the biggest and most dangerous of all such treaties, told us: “The UK has signed trade agreement after trade deal and there has never been a issue in the past.” An expert on this topic accused critics of “exaggeration … the truth is, ISDS does not affect the UK much”. The general impression seemed to be that solely developing countries needed to fear these lawsuits. Cautionary notes that “as corporations grasp the authority bestowed upon them, they will turn their attention from the vulnerable countries to the strong ones” were greeted by scepticism.

That warning has now materialised. In the current period, oil and gas and resource corporations have filed a unprecedented number of suits against nations across the economic spectrum, challenging – like the example of the Whitehaven project – official measures to prevent climate breakdown. Firms have so far won one hundred and fourteen billion dollars through ISDS, of which fossil fuel companies have secured $84bn. That equates to the combined GDP