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What is your reckon our democratic process works? Perhaps along the lines of this. Citizens choose MPs. They debate and pass bills. If a majority is achieved, the bills become law. Legislation is upheld by the courts. That's it. However, that was how it operated in the past. Not anymore.

The Emergence of Offshore Courts

Nowadays, foreign corporations, and the wealthy individuals behind them, can sue nation states for the policies they pass, at private courts made up of commercial attorneys. The cases take place in secret. Unlike our courts, these panels provide no avenue for appeal or legal review. You or I are barred from bringing a case to them, just as our government, or even enterprises operating from this country. The door is open exclusively to businesses operating from foreign soil.

Should an arbitration panel determines that a law or policy might diminish the corporation’s anticipated profits, it has the power to grant financial penalties of hundreds of millions of pounds, even billions.

This compensation are based not on actual losses but money the panel members determine the company would perhaps have made. The administration may have to rescind the measure. It is discouraged from passing future laws in that area, for fear of being sued.

A Process Spiralling Out of Control

Historically high figures of cases are being initiated, as companies take cues from each other, and hedge funds fund legal actions in return for a portion of the takings. The outcome? National sovereignty and democracy are turning into unaffordable.

This mechanism is referred to as “investor-state dispute settlement” (ISDS). The rationale it is permitted to override a country's own laws and the rulings made by legislatures is that this stipulation has been written – absent public approval, and frequently under an atmosphere of extreme secrecy – within international trade agreements.

A Real-World Case: The UK Coal Mine

Twelve months ago, a conservation group secured a significant win at the High Court. The presiding officer found that proposals to dig the first deep coalmine in the UK for three decades, in northwest England, were found to be wrongly permitted by the Conservative government, which had accepted the extraordinary assertion that the mine could have no consequence on our carbon budgets. The incoming administration later cancelled the permission the former government had granted. Currently, this success faces being overturned by an offshore tribunal accountable to no one but the entities filing the suit.

Last August, a corporate entity whose ultimate owners reside in the tax haven initiated proceedings against the UK government. Last week a dispute settlement body in Washington DC was established to hear it.

This firm is seeking compensation from the UK for the money it would have generated if the mine had been permitted to commence operations. We have little idea how much this sum represents. Which individual is serving as its counsel in opposition to the British government? An elected representative, and former attorney-general in the Conservative government, the self-proclaimed patriot Geoffrey Cox. The administration makes a decision, the national judiciary supports it, then a foreign company challenges it through an secretive offshore tribunal, and a sitting MP acts on its behalf.

The Russian Challenge

Concurrently that the tribunal on the mining lawsuit was established, it was revealed from a parliamentary answer that the UK is also being sued under ISDS by a wealthy Russian individual, a sanctioned individual. We know nothing of the case at present, but it is highly possible that he may employ the tribunal to contest the penalties the UK imposed on him following the Russian aggression. He has already started suing a small nation for this reason, seeking a colossal sum: an amount representing half state's yearly budget. Included in the lawyers representing him there? Cherie Blair, wife of the former British prime minister.

International law scholars believe that the EU’s hesitation in leveraging immobilised state funds as guarantee for its financial support package stems from Belgium’s fear that it could be sued in the secret arbitration panels, under a trade agreement. This unprecedented, undemocratic power over democratic administrations may be obstructing the money Ukraine critically depends on.

Misleading Claims and Growing Threats

Politicians promised that such things were not possible. In 2014, a former prime minister, promoting the biggest and most dangerous of all such treaties, declared: “The UK has signed trade agreement upon trade deal and we have never seen a problem in the past.” A consultant on this topic accused activists of “scaremongering … the truth is, ISDS barely touches the UK much”. The prevailing narrative seemed to be that solely developing countries needed to fear such legal actions. Predictions that “when companies grasp the influence they now possess, they will shift their focus from the vulnerable countries to the strong ones” were greeted by scepticism.

That threat is now a reality. In the current period, oil and gas and mining firms have filed a unprecedented number of cases against nations both wealthy and developing, challenging – like the example of the Whitehaven project – government attempts to halt environmental catastrophe. Companies have to date won $114bn through ISDS, of which fossil fuel companies have obtained $84bn. That is equivalent to the combined GDP